Incentive to Invest in New Technology Rather than Trade Permits An electric utility may choose to invest in a new technology for controlling emissions rather than engage in permit trades. If MAC2 represents the new technology, how much will the polluter save at El compared to staying on its initial MAC,? MAC What if there is a trade at price P,? MAC, Gains with or without trade from the New Technology? Po e E3 E1 E2 Eo 18 Emissions

Incentive to Invest in New Technology Rather than Trade Permits An electric utility may choose to invest in a new technology for controlling emissions rather than engage in permit trades. If MAC2 represents the new technology, how much will the polluter save at El compared to staying on its initial MAC,? MAC What if there is a trade at price P,? MAC, Gains with or without trade from the New Technology? Po e E3 E1 E2 Eo 18 Emissions

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 9SCQ: The rows in Table 12.7 show three market-oriented tools for reducing pollution. The columns of the...

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The rows in Table 12.7 show three market-oriented tools for reducing pollution. The columns of the table show three complaints about command-and-control regulation. Fill in the table by stating briefly how each market-oriented tool addresses each of the three concerns.
Would environmentalists favor command-and-control policies as a way to reduce pollution? Why or why not?
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
Radio stations, tornado sirens, light houses, and street lights are all public goods in that all are nonrivalrous and nonexclusionary. Therefore why does the government provide tornado sirens, street lights and light houses but not radio stations (other than PBS stations)?
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.
Plants A and B emit 12 tons and 6 tons of carbon dioxide (CO2), respectively. MAC(marginal abatement costs) for a = 12 - Ea, MACb=12-2Eb MD(marginal damage) = 1/3*E (E indicates CO2 emission) What is the social optimum for power plants A and B to reduce CO2 by some amount, and how much reduction cost each power plant bears?
Assume that the market for tradable emissions permits by power plants has been operating efficiently for severalyears. An engineering firmthen invents a lower cost device for pollution abatement. What happens to theequilibrium market price of a tradable permit, and why? Draw a supply and demand diagram, with a fixedsupply of pollution permits, along with your answer.Has the socially optimal amount of pollution increasedor decreased? Explain
Suppose residents of Toadhop live on the Quabache River, a river prone to flooding. Suppose there are 1,000 (type A) people who value flood control more than the 1,000 (type B) people. TypeADemandQD =100−P TypeBDemandQD =50−P where Q measures the quality of flood control. Refer to Scenario 2. If the price of a unit of flood control is $100,000 and the citizens of Toadhop did not work together, the amount of flood control purchased would be (a) 0. (b) 10. (c) 25. (d) 70. Refer to Scenario 2. If the price of a unit of flood control is $100,000 and the citizens of Toadhop gather for a townhall meeting to find the socially optimal level of flood control, and they are successful, how much will each type B individual contribute per unit of flood control? (a) $25 (b) $50 (c) $75 (d) $100 Refer to Scenario 2. If the price of a unit of flood control is $100,000 and the citizens of Toadhop gather for a townhall meeting to find the socially optimal level of flood control, and they are…
It is discovered that production of painclear damages groundwater quality – this affects just one party: Greenview Nature Park (a park run by the local council which people can access, for free, for recreation). The value of the damage caused is £48 per litre of paint produced – so the pollution damage caused when output is 1 litre=£48, the 2 nd litre causes another £48 of damage, so pollution damage caused when output is 2 litres=£96. This damage happens and is the same whenever XY produces, whatever the level of output (same if it produces 1 litre of or 1 000 000 litres of painclear - each additional litre imposes an additional £48 of pollution costs). The drug has no side effects on consumers. (the clarifying information in red was added on 21/12/23) 1.Create and explain a new diagram which shows relevant costs, price and levels of output if XY produced the optimal quantity of painclear from a societal perspective. 2. Assume XY and Greenview can negotiate. Create and explain 2 new…
ACME Industries produces steel near a river that nearby residents liked to swim. A by-product of steel produced by ACME Industries is toxic sludge that pollutes the river. Demand for steel by consumers in tonnes is given by QD = 90 - 5p. The Private Margiinal Cost per tonne of steel produced ACME Industries is given by the supply curve QS = 25p. Each tonne of steel produced creates external marginal damage on Wimmera of $1.20 due to decreased water quality. The government is considering imposing a tax on the market to correct the externality. 4. Following imposition on collective tax, the equilibrium quality is: 5. What is the deadweight loss that occurs if the collective tax is not imposed? 6. What fraction of the economic incidence of the tax falls on steel consumers?
A corrective tax on pollution O a. sets the quantity of pollution. b. determines the demand for pollution rights. c. reduces the incentive for technological Innovations to further reduce pollution. d. sets the price of pollution. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.