The marginal benefit of reducing pollution and the marginal cost of reducing pollution are given by the following equations: MB = -2U2+ 18, and MC = 2U² + 2, where U is the number of units of pollution abatement. What is the optimal number of units of pollution abatement? O A) o B) 1 C) 2
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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.The perfectly competitive profit-maximizing firm in Exhibit 6 creates water and air pollution as a consequence of producing its output of pigs. If pollution costs are borne by third parties, the firm will maximize economic profit by choosing to a. voluntarily incur costs to reduce its pollution. b. produce at output rate Q3. c. produce at output rate Q2. d. produce at output rate Q4. EXHIBIT 6 Private and Social CostFrom an economic viewpoint, the optimal amount of pollution a. is zero because all pollution imposes costs on society. b. is that amount firms create when they maximize economic profits by setting their marginal private costs equal to market price. c. is that amount where the marginal social costs of producing a good precisely equals the price of the good. d. Both answers b. and c. are correct.
- (Optimal Provision of Public Goods) Using at least two individual consumers, show how the market demand curve is derived from individual demand curves (a) for a private good and (b) for a public good. Once you have derived the market demand curve in each case, introduce a market supply curve and then show the optimal level of production.Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. n the table below are the marginal abatement costs of two firms. Note that an entry in the table indicates the cost of reducing emissions by one unit from the previous level. For example, $104 is the additional abatement cost for Firm 1 to reduce its emissions from 3 tons to 2 tons, and $40 is the cost for Firm 2 to reduce its emissions from 7 tons to 6 tons. 1.In an unregulated environment each firm produces 10 tons of emissions (20 tons total). Using the table above, what emissions levels (i.e., emissions standards) would you assign if you wanted to limit aggregate emissions to 7 tons in a cost-effective manner? Firm 1’s emissions level ________________ Firm 2’s emissions level ________________ 2.Given the emissions levels from Question 1, calculate the total abatement cost for each firm? Firm 1’s total abatement cost ________________…If the correct amount of pollution is being produced now, which of the following is true? The average cost of pollution: a. is exactly equal to the average cost of the pollution reduction.b. can be greater than, equal to, or less than the costs of pollution reduction.c. reduction is greater than the cost of the pollution at all levels of pollution.d. reduction is less than the cost of the pollution at all levels of pollution.
- Suppose the marginal benefit (MB) and marginal cost (MC) curves for emitting particulate matter are given by the following schedules, where E is the quantity of emissions per period. The marginal benefits and costs are measured at the quantities of emissions shown. E/Period MB ($ MC ($) 0 230 0 200 190 10 400 150 30 600 110 50 800 70 70 1000 30 90 Use the information above to calculate the tax rate that would achieve the efficient rate of emissions. Efficient Tax Rate =$__ per unit of pollutionSuppose 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…Why do largest firms, who are also some of the largest polluters, have the resources to invest in more ‘eco’ technologies but often choose not to in favour of maintaining/increasing profit margins
- 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 .Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake?The population of Outbacktown is 1,000 people. Each of them has a marginal benefit curve for fireworks given by：MB = 10 − 2Q dollars, where Q is the number of minutes of the fireworks display. The marginal cost is constant, each extra minute costs 5,000 dollars; thus MC = 5,000. Outbacktown is sparsely populated, and the terrain is very flat, so it is fairly safe to assume that fireworks over there are both nonrival and nonexcludable. Obtain the optimal number of minutes that the show should last. What is the Lindahl price for each individual Now suppose that the usual provider is unavailable to offer the firework display this year and the major has to go with a new provider, Mr. Smoke. Fortunately, Mr. Smoke’s marginal cost is the same as the usual provider. However, the environmental quality of Mr. Smoke’s display is not that great; it generates a negative externality in the health of the population that has been estimated to be 2 dollars per each minute of the…
