Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 10, Problem 8IAPA
To determine
To explain:
The result of allowing too many licenses for emission with the help of graph.
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Explain how each of the following work: a green tax, a subsidy, and an emissions trading system.
Chapter 8 in Tietenberg and Lewis looks at climate change, the most important environmental issue of our time. Economists generally agree that putting a price on carbon is the best approach to reducing climate warming carbon emissions. The two main strategies for doing this are carbon taxes and the cap and trade version of emissions trading. Discuss the pros and cons to these two approaches to pricing carbon. Why do economists favor these kinds of market-based strategies to pollution control over “command and control” approaches such technology standards?
In the graph below, circle the efficient level of emissions.
Chapter 10 Solutions
Foundations of Economics (8th Edition)
Ch. 10 - Prob. 1SPPACh. 10 - Prob. 2SPPACh. 10 - Prob. 3SPPACh. 10 - Prob. 4SPPACh. 10 - Prob. 5SPPACh. 10 - Prob. 6SPPACh. 10 - Prob. 7SPPACh. 10 - Prob. 8SPPACh. 10 - Prob. 9SPPACh. 10 - Prob. 10SPPA
Ch. 10 - Prob. 1IAPACh. 10 - Prob. 2IAPACh. 10 - Prob. 3IAPACh. 10 - Use the following information to work Problems 3...Ch. 10 - Prob. 5IAPACh. 10 - Prob. 6IAPACh. 10 - Prob. 7IAPACh. 10 - Prob. 8IAPACh. 10 - Prob. 9IAPACh. 10 - Prob. 1MCQCh. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQ
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- The following graph (see link below) represents the market for high-emission cars. Answer the following questions assuming that the externality is not internalised. - What is the price-quantity combination determined by the market? - What is the private benefit of the last unit traded in the market? - What is the private cost of the last unit traded in the market? - What is the social value of the last unit traded on the market? - What is the social cost of the last unit traded on the market? - Which quantity is socially optimal (what is the effecient quantity)? - What is the deadweight loss generated by the externality?arrow_forwardEconomists offer two major potential policies to reduce our greenhouse gas emissions: pollution taxes and cap-and-trade programs. Which do you think would be most effective at reducing emissions? Discuss the pros and cons of each, as well as the difference between the two policies.arrow_forwardWhat did the National Environmental Policy Act accomplish? Briefly describe the origin and mission of the U.S. Environmental Protection Agency.arrow_forward
- A gas tax that a government enacts to fight climate change works by: O externalizing the internal cost of climate change. internalizing the external cost of climate change. O raising funds that the government can use to fight climate change. raising funds to finance social safety net programs needed to cushion the downturn caused by the transition to a green economy.arrow_forward5) Suppose that an international agreement requires exporters to reduce their carbon emissions. In this context, government subsidies are provided to R&Ds that will enable green-friendly production in exporting industries that produce high-tech.a) Explain what might be the reasons for the implementation of such an activist policy.(Answer this question with the arguments of your main course book, (Krugman; Obstfeld; Melitz; 2015))b) Describe how the Environmental Kuznet curve works. Let's assume that there is a green-friendly technology transfer from developed countries to less developed countries in order to achieve the goal of a decrease in emission, then what will happen to the curve?arrow_forwardThe following figure (Figure 10.4 on your textbook) shows the present value of 1 dollar of climate damages, as a function of the year the damages took place. What can this graph be used to calculate, based on different rates? a. the social cost of carbon b. growth discounting c. inflation d. time discountingarrow_forward
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