Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 12 - E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 6 0.5E. If the government raises the tax on emissions from $2 to $3, then the benefits of adopting the new technologies increase by $__. (Hint: when not considering adoption costs, benefits are simply defined by changes in total compliance costs.) Please round your final answer to two decimal places if necessary. Answer:

Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 12 - E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 6 0.5E. If the government raises the tax on emissions from $2 to $3, then the benefits of adopting the new technologies increase by $__. (Hint: when not considering adoption costs, benefits are simply defined by changes in total compliance costs.) Please round your final answer to two decimal places if necessary. Answer:

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.9P

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Economists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.
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Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 16 - 2E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 8 - E. If the government raises the emissions tax from $2 to $3, then the benefits of adopting the new technologies increase by $____. (Hint: recall that the benefits from adopting new technologies are simply the difference in total compliance costs.) Please round your final answer to two decimal places if necessary. Answer is not 2
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Consider an industry with two firms that emit a uniformly mixed air pollutant (e.g., carbon dioxide). The marginal abatement cost functions for Firm 1 and Firm 2 are: MAC1 = 100 - e1 MAC2 = 100 - 4e2 Aggregate emissions for the industry are denoted as E = e1 + e2. [1] In an unregulated environment how many units of emissions does each firm emit? Firm 1’s unregulated level of emissions ____________ Firm 2’s unregulated level of emissions ____________ Total unregulated level of emissions ______________
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Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 8 - E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 4 - 0.5E. Moreover, assume that the adoption costs for the new technologies are $3. If the government raises the tax on emissions from $1 to $3, then the firm's total costs increase by $____. (Hint: total costs are different from total compliance costs. Total compliance costs are the sum of TAC and tax payment, while total costs are the sum of total compliance costs and adoption costs (remember that adoption costs are only incurred if the firm actually decides to adopt the new technology).) Please round your final answer to two decimal places if necessary. THE ANSWER IS NOT 9
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Suppose that a firm's marginal abatement cost function with existing technologies is MAC = 12 - E. If the firm adopts new pollution abatement technologies, then its marginal abatement cost function will become MAC = 6 - 0.5E. With an emissions tax of $4, the benefits of adopting the new technologies equal $____. Please round your final answer to two decimal places if necessary. THE ANSWER IS NOT 16 Maybe 4?