EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9780100605930
Author: Blinder
Publisher: YUZU
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Question
Chapter 16, Problem 4TY
To determine
Impact on pollution emission when tax is imposed.
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Define pollution charge and will our economy be able to control pollution? Share your thoughts in a paragraph.
Imagine the government of California has proposed a new tax on vehicles based on the amount of emissions they produce in a year. In 2019, there will be 20 tons of emissions produced. The governor’s office has run the calculations and found that the socially optimal level is 14 tons and the marginal damage from each unit of pollution is $150.
Imagine there are two types of drivers in California: commuters and non-commuters. Imagine that the marginal cost of reducing pollution for commuters is MCA_C=150Q and the marginal cost of reducing pollution for non-commuters is MCA_N=30Q. Each type initially created ten tons of pollution each. Their total cost of reductions is equal to TCA_C=75Q^2 and TCA_N=15Q^2. How much would each type choose to reduce under the tax?
Imagine the governor instead suggested forcing all drivers to reduce their emissions by 30% from their 2019 levels. How would the costs of reduction here compare to the taxation case (please provide actual numbers)? Do you…
What externality is carbon pricing trying to address? Explain why this is an externality. What roll does government have in addressing externalities
Chapter 16 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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- Use this prompt to answer the following questions about tradeable permits. Two firms each currently dump 20 tons of pollution a piece into a local river. The government wants to reduce the amount of pollution in the river so they issue 5 permits to each firm. The cost for firm A to reduce their pollution by 1 ton is $1000 and the cost for firm B to reduce their pollution by 1 ton is $800. When answering the questions below simply enter the number for your answer do not write a full sentence. Question 1 If trade is NOT allowed what will be the cost of reducing pollution will be for firm A, for firm B, and in total. 3 ptsarrow_forwardWhy has supply and demand failed to prevent pollution?arrow_forwardThe following companies all manufacture widgets and dump tons of glop into the air. Manufacturer Cost to clean up 1 ton of glop Current contribution to overall pollution (tons of glop) 200 Polluters-R-Us Smog Brothers, Inc. Really Dirty Industries 0 $ 70 100 30 The government wants to halve total pollution but does not know how much it will cost each company. the government employs a tradable permit scheme in which it gives the same number of permits to each manufacturer at no cost, the total cost of cleanup for Smog Brothers, Inc., after the exchange of permits, is $ 7,000 6,000 13,000 200 200arrow_forward
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