ECON.TODAY (COMPLETE)-TEXT ONLY
18th Edition
ISBN: 9780133882285
Author: Miller
Publisher: PEARSON
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Chapter 27, Problem 2FCT
To determine
Why city government think that they gain from imposing restrictions of usage of plastic bags.
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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…
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?
Suppose that the inverse market demand curve for cloth is p = 150 - 2Q, the private marginal cost (unregulated competitive market supply) is = 75 + Q, and the private marginal damage from pollution is = 2Q.
What is the unregulated competitive equilibrium quantity and price?
What is the social marginal cost of production and social equilibrium quantity and price?
What specific tax t (per unit) would result in the social optimum?
Chapter 27 Solutions
ECON.TODAY (COMPLETE)-TEXT ONLY
Ch. 27 - Prob. 27.1LOCh. 27 - Prob. 27.2LOCh. 27 - Prob. 27.3LOCh. 27 - Prob. 27.4LOCh. 27 - Prob. 27.5LOCh. 27 - Prob. 27.6LOCh. 27 - Prob. aFCTCh. 27 - Prob. bFCTCh. 27 - Prob. cFCTCh. 27 - Prob. dFCT
Ch. 27 - Prob. eFCTCh. 27 - Prob. 1CTQCh. 27 - Prob. 2CTQCh. 27 - Prob. 1FCTCh. 27 - Prob. 2FCTCh. 27 - Prob. 1PCh. 27 - Prob. 2PCh. 27 - Prob. 3PCh. 27 - Prob. 4PCh. 27 - Prob. 5PCh. 27 - Prob. 6PCh. 27 - Prob. 7PCh. 27 - Prob. 8PCh. 27 - Prob. 9PCh. 27 - Prob. 10PCh. 27 - Prob. 11PCh. 27 - Prob. 12PCh. 27 - Prob. 13PCh. 27 - Prob. 14PCh. 27 - Prob. 15PCh. 27 - Prob. 16P
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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.arrow_forwardExplain the intuition behind why market-based instruments (emissions taxes/tradeable permits) are cost-effective, whereas uniform standards are generally not. Provide a graph for a situation where market-based instruments would alleviate a particularly-large deadweight loss relative to the command-and-control “standards” policy. Then make an argument about why we generally need some mix of both policies in the context of (1) electricity consumption and (2) land conservation.arrow_forwardAssume citizens of Destrahan are complaining that Shell Chemical and Dow Chemical are polluting the environment. Currently, each firm emits 40 tons of pollution per year. Shell Chemical could reduce its pollution at a cost of $500 per ton, and Dow Chemical could reduce its pollution at a cost of $100 per ton. To reduce overall pollution to 40 units, the mayor gives each firm 20 tradable pollution permits. Each permit allows a firm to emit one ton of pollution. Assuming each permit has a market value is $200, what is the cost of reducing pollution to the desired level? a.$2,000 b.$4,000 c.$8,000 d.$10,000arrow_forward
- Which of the following statements about pollution taxes, cap and trade, or command-and-control standards is FALSE? a.) Pollution taxes strictly control the amount of pollution but leave marginal abatement costs to be determined by the market. Cap-and-trade programs strictly control marginal abatement costs but leave the actual amount of pollution to be determined by the overall level of economic activity. b.) Pollution taxes are unpopular in the U.S. because American companies tend to dislike taxes in general. However, pollution taxes offer firms some greater certainty about how large will be their marginal cost of abatement on the last unit of abatement they will need to do, if they are to minimize the costs they incur both for cleanup and for pollution taxes. c.) Both command-and-control pollution standards, and cap-and-trade programs, can effectively limit the total amount of pollution, but command and control will be least-cost only by accident. Usually,…arrow_forwardExplain why, in the absence of governmental environmental regulation, competitive markets overproduce goods whose production involves the creation of negative externalities. Provide an example of a good that generates a negative externality.arrow_forwardQ67 How might a government intervene in a market to prevent the overuse of a common-property resource, such as an ocean fishery? a. Reducing the marginal social cost such that marginal social cost equals marginal social benefit, thereby establishing allocative efficiency. b. Subsidies to the consumers of fish. c. Encouraging the use of larger, more efficient trawlers to reduce the marginal private cost to fishers. d. A system of licences and quotas for fishers. e. Subsidies to the firms catching the fish.arrow_forward
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