TrueFalseAnswer BankThe term "cap and trade" describes regulation by marketable permitsCompared with no regulation, regulation with marketable permits decreases firms' costsPollution taxes are more effective at reducing pollution than marketable permitsMarketable permits provide their owners with the right to pollute a specified amount.Marketable permits typically achieve pollution reduction at a lower cost than command-and-control regulation

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Answered: True False Answer Bank The term "cap…

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 5PA

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I notice that the last section which I'm including isn't explained. ------ Regulation Versus Tradable Permits Determine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might need to get information from previous tasks to complete this table.) Proposed Method Total Cost of Eliminating Six Units of Pollution (Dollars) Regulation ?? Tradable Permits ?? In this case, you can conclude that eliminating pollution is ___ costly to society when the government distributes tradable permits than when it regulates each firm to eliminate a certain amount of pollution. ------ Can you please explain this part of the question? Much appreciated.
There are three industrial firms in the county. -Firm A's initial pollution level is 50 units. Its cost of reducing pollution by 1 unit is $30. -Firm B's initial pollution level is 40 units. Its cost of reducing pollution by 1 unit is $20.-Firm C's initial pollution level is 30 units. Its cost of reducing pollution by 1 unit is $40.The government wants to reduce pollution to 90 units so it gives each firm 30 tradable pollution permits.(i) Who sells permits? (ii) How many do they sell? (iii) Who buys permits? (iv) How many do they buy?
Many observers believe that the levels of pollution in our society are too high. True or False: If society wishes to reduce overall pollution by a certain amount, it is efficient to have firms with highest profit bearing the largest burden of reducing pollution and firms with lowest profit bearing the least burden. Why are command-and-control approaches generally unable to target the firms that should undertake bigger reductions? Check all that apply. Command-and-control approaches often rely on uniform reductions among firms. There is no incentive to reduce pollution beyond the mandated amount. The costs of reducing pollution are the same across firms. Economists argue that appropriate corrective taxes or tradable pollution rights will result in efficient pollution reduction. Which of the following statements support(s) this claim? Check all that apply. Corrective taxes or tradable pollution rights give firms greater incentives to reduce pollution.…
Suppose that the market for a certain good has an inverse demand of P = 200 − Q.The aggregate private marginal cost for the firms that produce the good is MC = 20 + Q.However, production of the good also creates pollution with an external marginal cost ofEMC = 10 + Q/2.a) If this is a perfectly competitive market with no regulation, what is theequilibrium price and quantity produced?b) Suppose instead that the market is a monopoly. Calculate the profit-maximizingprice and quantity.c) Determine the socially efficient price and quantity for the good.d) Calculate the socially optimal Pigouvian tax to levy on the competitive firms tomake them produce at the socially efficient level.
please answer all. 5. Correcting for negative externalities - Regulation versus tradablepermits Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Cost of Eliminating the... First Unit of Pollution Second Unit…
10. Which is not a valid argument favoring the use of output regulation over input regulation?a. Firms may have different ways of reducing pollution.b. Firms may know better than the government how to reduce pollution cheaply.c. It may be easier to monitor the use of technology than the level of emissions.d. Output regulations, when enforceable, can ensure that the efficient level of pollution is not exceeded.
Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost MCLA = (1/2)aL and older firms with dirtier MCHA = aH, where ai is the level of abatement undertaken by firms of type i = L, H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry. Suppose instead that the government uniformly allocates tradable emissionís permits. What abatement allocation will prevail after the permits are traded among firms? Is this allocation efficient?
Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost M CLA L = (1/2) aL and older firms with dirtier M CAH = aH , where ai is the level of abatement undertaken by firms of type i = L,H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry: 1. What Pigouvian tax t will implement the efficient allocation (aL; aH )? Is the resulting allocation an efficient allocation? What is the government’s tax revenue? 2. Suppose that in order to avoid the costly obtention of disaggregate information about individual firms cost, the government just implements a uniform standard aui = A*/2. Is this allocation efficient? If not, what is the deadweight loss?
Firms in a polluting industry can be classified in two groups: newer firms with a cleaner technology that can abate pollution at a lower marginal cost M CLA L = (1/2) aL and older firms with dirtier M CAH = aH , where ai is the level of abatement undertaken by firms of type i = L,H. The social marginal benefit of abating pollution from this particular industry is MBA = 120 - A, where A is the aggregate level of abatement in that industry: 1. What Pigouvian tax t will implement the efficient allocation (aL; aH )? Is the resulting allocation an efficient allocation? What is the government’s tax revenue? 2. Suppose that in order to avoid the costly obtention of disaggregate information about individual firms cost, the government just implements a uniform standard aui = A*/2. Is this allocation efficient? If not, what is the deadweight loss? 3. Suppose instead that the government uniformly allocates tradable emission’s permits. What abatement allocation will prevail after the…
ayor Grinch imposes a $1 tax on each bottle of Zlurp. Consumption per person is now bottles. This yields a per-person consumer surplus of not including the cost of pollution, a per-person external cost of , and government revenue of per person. Total surplus per person is now as a result of this policy. (Hint: Total surplus is equal to consumer surplus minus the external cost of pollution plus government revenue.) Based on your calculations, you support the mayor's policy because it welfare compared to before the tax.
Suppose there are only two polluting firms, called A and B, with the following marginal abatement costs: 1602AA MACe=− and 100BB MACe=−, where A e represents firm A’s emissions in tons and B e represents firm B’s emissions in tons. Suppose the government wishes to ensure that the two firms together emit 60 tons of the pollutant and uses a Tradable Emission Permit (TEP) policy. Assume that each TEP allows its holder to emit 1 ton, and that the market for permits is perfectly competitive. a. Suppose the government initially distributes the total number of TEPs it issues equally between the two firms. The permits are distributed free of charge. Once trade in permits takes place, what will be the equilibrium in the market for TEPs (i.e. which firm will buy how many TEPs from the other, and at what price)? b. Briefly describe three problems of setting up a TEP market.
Advertisement-free radio broadcasting is a non-excludable public good.The following table shows the private marginal benefits of each of 10,000 residents in a rural county as well as the social marginal benefits from hours of ad-free broadcasting per day. Hours per day Private MB Social MB 6 $7 $70,000 8 $6 $60,000 10 $5 $50,000 12 $4 $40,000 Each hour of broadcasting costs $50,000.The market outcome would be ________ hours of ad-free broadcasting each day. The efficient quantity is ______ hours of ad-free broadcasting each day. Select one: A. 0; 0 B. 0; 10 C. 6; 12 D. 10; 0 E. 10; 10

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