The problem of adverse selection in environmental economics refers tohow, with poor information, consumers may choose environmental harmful products overenvironmentally friendly products.the cthical explanation as to why houscholds and producers choosc actions that lead to degradation ofthe environment.the failure of the property rights system that results in some of costs of production of one agent beingimposed upon another agent with no compensation.d. how, with poor information, the market for pollution liability insurance may fail.how, with nonexclusive property rights, some individuals may choose to consume a product withoutpaying for it.1.a.b.c.c.Production of stcel requires the burning of coal and is associated with the emission of SO.. SO: causes acidrain. According to the Pigouvian method, allocative efficiency in producing stcel can be achieved by setting atax equal tothe marginal social cost of producing steel.b.2.a.the total social cost of the damages caused by the acid rain.the total social cost of producing steel.d. the marginal external bencfit of producing stcel.the marginal external cost of producing stcel.с.с.Government intervention will not be necessary when voluntary programs internalize an externality. Whichof the following will make it difficult for voluntary programs to work?Well defined property rights.b. Large numbers of individuals involved.Low costs of complying with the programs.d. Obscure objectives associated with the voluntary program.c. All of the above.f. b and d.a.c.

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The problem of adverse selection in environmental economics refers to how, with poor information, consumers may choose environmental harmful products over cnvironmentally friendly products. b. 1. a. the ethical explanation as to why households and producers choose actions that lead to degradation of the environment. the failure of the property rights system that results in some of costs of production of one agent being imposed upon another agent with no compensation. d. how, with poor information, the market for pollution liability insurance may fail. how, with nonexclusive property rights, some individuals may choose to consume a product without paying for it. c. c.

The problem of adverse selection in environmental economics refers to how, with poor information, consumers may choose environmental harmful products over cnvironmentally friendly products. b. 1. a. the ethical explanation as to why households and producers choose actions that lead to degradation of the environment. the failure of the property rights system that results in some of costs of production of one agent being imposed upon another agent with no compensation. d. how, with poor information, the market for pollution liability insurance may fail. how, with nonexclusive property rights, some individuals may choose to consume a product without paying for it. c. c.

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 12SCQ: Consider the case of global environmental problems that spill across international borders as a...

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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.
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?
From an economic perspective, is it sound policy to pursue a goal of zero pollution? Why or why not?
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?
Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.) Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs. What is the optimal level of sewage for this city? Why not just pass a law that films can emit zero sewage? After all, the total benefits of zero emissions exceed the total costs.
In the tradeoff between economic output and environmental protection, what do the combinations on the protection possibility curve represent?
Is zero pollution an optimal goal? Way or why not?
Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?
Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
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.
As the extent of environmental protection expands, would you expect the marginal benefits of environmental protection to rise or fall? Why or why not?