Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 14, Problem 5SQP
To determine
The inefficiencies in the instructor’s approach.
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Environmental regulation was discussed for cases in which the market is unable to price risk correctly. In those cases, regulatory agencies are often tasked with evaluating risk and with administrating any regulations imposed. What does Public Choice Theory suggest might be the outcome of these bureaucratic processes in terms of the optimal level of regulation? Why?
From the perspective of economists which statement is true:
1.) Benefits estimates for an environmental regulation that will reduce risks to human life probably should depend on the income levels of the people who will be affected by the regulation, despite political pressures to use the identical number for everyone, regardless of their income level.
2.)None of the other statements is correct.
3.) It is wrong to use willingness to pay as a measure of the benefits from a regulation to reduce environmental mortality risks. Rich people will be willing to pay more than poor people for the same reduction in risks. If the cost of the regulation is high, it is possible that the estimated net benefits from the project will be positive for a rich community but negative for a poor community, so only the rich community will get the protection.
4.) Suppose a specific type of environmental regulation, intended to reduce mortality risks, passes a benefit-cost test in the U.S. Then…
PP#3
Which of the following are examples of command-and-control regulation?
The U.S. government determines solar panels are cleaner energy and subsidizes their use to reduce CO2 emissions from manufacturing industries.
The U.S. government makes subsidies available to the manufacturing industries whose CO2 emissions exceed certain levels to install equipment to scrub the CO2 from their emissions.
The U.S. government requires firms to install antipollution equipment to improve air and water quality.
Chapter 14 Solutions
Economics For Today
Ch. 14.2 - Prob. 1.1GECh. 14.2 - Prob. 1.2GECh. 14.2 - Prob. 1.3GECh. 14.2 - Prob. 2.1GECh. 14.2 - Prob. 2.2GECh. 14.2 - Prob. 2.3GECh. 14.2 - Prob. 2.4GECh. 14 - Prob. 1SQPCh. 14 - Prob. 2SQPCh. 14 - Prob. 3SQP
Ch. 14 - Prob. 4SQPCh. 14 - Prob. 5SQPCh. 14 - Prob. 6SQPCh. 14 - Prob. 7SQPCh. 14 - Prob. 8SQPCh. 14 - Prob. 9SQPCh. 14 - Prob. 10SQPCh. 14 - Prob. 11SQPCh. 14 - Prob. 12SQPCh. 14 - Prob. 13SQPCh. 14 - Prob. 14SQPCh. 14 - Prob. 15SQPCh. 14 - Prob. 16SQPCh. 14 - Prob. 1SQCh. 14 - Prob. 2SQCh. 14 - From an economic viewpoint, the optimal amount of...Ch. 14 - Prob. 4SQCh. 14 - Prob. 5SQCh. 14 - Prob. 6SQCh. 14 - Prob. 7SQCh. 14 - Prob. 8SQCh. 14 - Prob. 9SQCh. 14 - Prob. 10SQCh. 14 - Prob. 11SQCh. 14 - Prob. 12SQCh. 14 - Prob. 13SQCh. 14 - Prob. 14SQCh. 14 - Prob. 15SQCh. 14 - Prob. 16SQCh. 14 - Prob. 17SQCh. 14 - Prob. 18SQCh. 14 - Prob. 19SQCh. 14 - Prob. 20SQ
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- Suppose a political candidate criticizes a government pollution permit policy that she says lets corporations buy and sell the right to pollute. She argues that our right to breathe and the future of our planet require real regulation instead of this type of government policy. Which of the following describes why most economists would disagree with her statement? A corrective tax would result in a more efficient outcome than either tradable permits or government regulation would. A free market in tradable pollution permits is typically more efficient than government regulation. Clean air is a fundamental right, and government regulation will allow too much pollution. The environment is so important that it should be protected as much as possible, regardless of the cost.arrow_forwardselects and explains how the selected type of regulation works and how the government achieves social efficiency through its implementation.arrow_forwardWhich of the following is not one of the three basic situations in which regulation is imposed? a. externalities b. natural monopoly c. price fixing d. imperfect informationarrow_forward
- 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; 10arrow_forwardAccording to free-market economists: a. when capital goods are allocated by the market, they will go to the firms who can most profitably use them. b. when a surplus or a shortage occurs, changes in prices rapidly send information to firms and households for them to act upon. c. because of the pervasiveness of externalities, there is a role for government regulation. d. All of the above are correct. e. Both a and b are correct. f. Both a and c are correct. g. Both b and c are correct. h. None of the above are correctarrow_forwardWhat"s correct when the government requires those buying a vehicle to provide a parking space prior to granting of vehicle registration documents. A. it is unfair because there have been many who were granted registration of vehicles without complying with this rule B. it is commendable because it eliminates negative externalities C. it is to be completely opposed because it will be another source of corruption D. A and B are correct E. B and C are correctarrow_forward
- Should the cost of compliance be considered when imposing air pollution regulation? For example, should the Environmental Protection Agency (EPA) consider costs when it regulates emissions from power plants?arrow_forwardExplain the economic case for social regulation that is based upon externalities. What is the meaning attached to market failure in this context?arrow_forwardSuppose a monopoly faces the market demand in the nearby figure. It has constant marginal cost equal to $6. Find the perfectly competitive quantity and price assuming the market is made up of producers each with marginal cost $6. Give a numeric answer for each and show them on the graph. What is the efficient quantity? Give a numeric answer and show it on the graph. Which market structure, monopoly or perfect competition, comes closer to achieving the efficient quantity? Now suppose there is a negative externality associated with producing the good of $5 per unit. Now which market structure, monopoly or perfect competition, comes closer to achieving the efficient quantity? Explain briefly.arrow_forward
- Suppose a political candidate criticizes a government pollution permit policy that she says lets corporations buy and sell the right to pollute. She argues that our right to breathe and the future of our planet require real regulation instead of this type of government policy. Which of the following describes why most economists would disagree with her statement? 1. A corrective tax would result in a more efficient outcome than either tradable permits or government regulation would. 2.A free market in tradable pollution permits is typically more efficient than government regulation. 3.Clean air is a fundamental right, and government regulation will allow too much pollution. 4.The environment is so important that it should be protected as much as possible, regardless of the cost.arrow_forwardI 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.arrow_forwardTrue or false: Economists believe that social regulation is an exception to the MB = MC rule because social regulation should in every case extend as far as possible in order to ensure safe products, less pollution, and improved working conditions. Larrow_forward
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