In the graph below, the solid blue line represents the marginal cost of reducing particle emissions (measured in pounds) for a firm. The dashed line represents a newly imposed pollution charge of $210 for every pound of pollution emitted. Suppose the firm is currently emitting more than 50 pounds of particle emissions and must decide how to respond to the pollution charge. (Assume that particle emissions can only be reduced in multiples of ten pounds.) By how many pounds will the firm choose to reduce its total particle emissions?

In the graph below, the solid blue line represents the marginal cost of reducing particle emissions (measured in pounds) for a firm. The dashed line represents a newly imposed pollution charge of $210 for every pound of pollution emitted. Suppose the firm is currently emitting more than 50 pounds of particle emissions and must decide how to respond to the pollution charge. (Assume that particle emissions can only be reduced in multiples of ten pounds.) By how many pounds will the firm choose to reduce its total particle emissions?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter13: Positive Externalities And Public Goods

Section: Chapter Questions

Problem 23P: HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow...

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Suppose there are two firms producing 6 units of pollution each. The government decides that they want to reduce the total pollution to 6 units, so they issue 3 pollution permits to each firm. The cost of abating the pollution for each firm are given in the following table: FIRM A Unit of pollution FIRM B Unit of pollution Marginal Cost of cleaning up this unit of pollution $6 $14 $25 S40 $60 $90 Marginal Cost of cleaning up this unit of pollution 535 $70 $120 $180 $280 $390 If the two firms work together to reduce the total cost of cleaning up the pollution, how many permits will be traded and which firm will sell the permits and which firm will buy the permits?
The graph shows the marginal cost of abatement curve, which shows the extra cost to the firm of cleaning up an additional unit of pollution. When a pollution charge of $5 per unit emitted is imposed, how many units of pollution will the firm choose to clean up? units of pollution cleaned up: When a pollution tax of $20 per unit emitted is imposed, how many units of pollution will the firm choose to clean up? units of pollution cleaned up:
(A) Suppose that the two firms merge. Write down the profit function of the merged firm. Calculate the profit maximizing level of output, the amount of pollution for the merged firm, and its profit. Is the merger Pareto improvement? Why or why not? (B) Suppose that the merger is forbidden by the government. Instead, now the fishery has the property right to water. In other words, anybody who wants to pollute the water needs to buy a pollution right from the fishery. Let the price of the pollution right be Px. Write down the steel mill’s new profit function and the fishery’s new profit function. (C) Calculate the profit maximizing level of output for each firm, the amount of pollution, and the price of pollution right. please, please answer the three questions together..
Consider a market with two polluting firms with linear marginal abatement cost curves. Firm B has increasing marginal abatement costs that are everywhere half as high as Firm A’s marginal abatement costs. The maximum amount of pollution that can be tolerated is less than the total these two firms would emit if their pollution was unrestricted. Thus some aggregate amount of abatement is necessary. The pollutant in question is uniformly mixing, so it doesn’t matter which firm cuts back how much, only that between them, they cut back by the required total amount. The environmental agency decides to solve the abatement allocation problem by giving out pollution permits in amounts such that each firm would be obliged to cut back their emissions by an equal amount. Would this be “fair”? Would it be “efficient”?
The following table shows the marginal costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second unit of pollution it would cost an additional $67. Firm Unit to be eliminated A B C D First unit 54 57 54 62 Second unit 67 68 66 73 Third unit 82 86 82 91 Fourth unit 107 108 107 111 Refer to Table 5. If the government charged a fee of $84 per unit of pollution, how many units of pollution would the firms eliminate altogether?
Marginal Abatement Costs: The marginal abatement costs of three firms are provided in the table below on page 109. Each firm is emitting now 10 tons/week. Therefore, the total emission of all firms is 30 tons/week. Suppose that society wants to reduce the level of emission by 50%, to 15 tons/week. Calculate the total cost of reducing the level of emission to 15 tons/week Assuming equiproportionate decrease in emissions which of the following is correct: 69 96 100 Assuming equimarginal decrease in emissions which of the following is correct: 69 96 100
Suppose there are two power plants that release sulfur dioxide (SO2) into air at their current production levels. Each firm currently emits 75 tons per year, thus emitting 150 tons total. Local authorities have decided they would like to reduce annual SO2 pollution to 100 tons per year (thus a 50 ton reduction). The power plants have different marginal abatement costs given by the following equations: MAC1 = 3q1 + 5 MAC2 = 2q2 (a) Suppose the local authorities decide to impose a uniform reduction of pollution by both power plants. In order to achieve the 50 unit reduction under this plan, both plants must reduce their emissions (abate pollution) by 25 units each. Find the total cost of abatement under this uniform reduction policy. (b) Find the efficient abatement amount for each power plant if you wanted to achieve the 50 unit reduction at the most cost-efficient way possible (i.e. find the q1 and q2 that achieves the 50 unit reduction in the cheapest way). What is the total cost of…
Firm A currently dumps 223 tons of chemicals into the local river. Firm B currently dumps 192 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives each firm 10 pollution permits. The abatement costs of one ton of pollution is $173 for Firm A and $76 for Firm B. What would be the total cost of reducing pollution, if the firms are allowed to trade permits between each other?
Two firms can reduce emissions at the marginal costs: MC1 = $12Q1 and MC2 = $4Q2, where Q1, and Q2 are the amount of emissions reduced by the first and second firms. Assume that with no control at all, each firm would be emitting 40 units of emissions (for aggregate emissions of 80 tons). a. Illustrate MC1 and MC2 on the graph. b. Find total costs for two firms with the tax. Hint. [Compute control cost with the tax that each firm will have to pay for the reduction of emission in b. and tax payments for the remaining emission.
Following are the marginal abatement costs of three firms . Suppose each firm is currently emitting 10 tons / week , so the total emissions are 30 tons / week . Suppose we wish to reduce total emissions by 50 % , to 15 tons per week . The following table provides marginal abatement costs for each firm . a ) What is the total cost if each firm cuts total emission by 50 % from their current levels . b ) What is the total cost if the total emissions decrease by 50 % ( to 15 tons per week ) that meets the equi - marginal principle . c ) From the society's point , which method of reducing ( a or b above ) emissions is better ? Provide a reason .
Complete the following Exercises. Use complete sentences. Consider two firms who each release 10 units of pollution initially, for a total of 20 units. Their supply curves for abatement are given below. These supply curves measure the marginal cost of abatement, or the cost of cleaning up each unit of pollution. For example, it costs firm 1 $40 to clean up (or abate) the 1st unit, $80 to clean up the 2nd unit, and so forth. Supply of Abatement UnitFirm 1Firm 2 1$ 40$ 36 2$80$56 3$120$76 4$160$96 5$200$116 6$240$136 7$280$156 8$320$176 9$360$196 10$400 $216 A.) Assume that the damages from the pollution are an external cost from the standpoint of the two firms. How many units will each abate? Why?Why are their marginal costs of abatement (supply curves) rising as they eliminate more pollution (i.e., as they get closer to zero units of pollution)? Now assume the Environmental Protection Agency has determined that the desired…
Part D E F needed b) Ana also reads that climate change is caused by carbon emissions from air travel. Two airlines run flights between two cities, Air A and Air B. The government has said that the airlines can produce 100 units of carbon emissions between them, under a carbon permit scheme, and should decide how to split the 100 units between them. Air A and Air B have the same operating costs and the same costs of reducing the amount of carbon that they produce per flight.Say Air A has been operating on the route for over 50 years and the government decides to give all the permits to Air A (based on its long use of the route). Air A offers a proportion R of the 100 units of permits to Air B and Air B can accept the offer or reject it and not fly on the route.• How will the other parameters of the model as discussed in this module affect the value of R* at which Air B accepts the offer?• Say that the government gives the permits to Air A for 5 years, and will gives them to Air B for…