Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 5, Problem 5.2.5PA
To determine
Possibility to eliminate all types of pollutions.
Expert Solution & Answer
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Check out a sample textbook solutionStudents have asked these similar questions
There are three identical firms in Happy Valley.
Firms
Initial Pollution Level
Cost of Reducing Pollution by 1 unit
A
30 units
$20
B
40 units
$30
C
20 units
$10
The government wants to reduce total pollution to 60 units, so it gives each firm 20 tradable permits.
Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so? What is the total cost of pollution reduction in this situation?
How much larger would the cost of pollution reduction be if the permits could not be traded?
There are three industrial firms in Kitona. The Government wants to reduce pollution to 120 units, so it gives each firm 40 tradable pollution permits.
Firm
Initial Pollution Level
Cost reducing pollution by 1 unit
A
70 Units
$20
B
80 Units
$25
C
50 Units
$10
Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation?
There are three industrial firms in Kitona. The Government wants to reduce pollution to 120 units, so it gives each firm 40 tradable pollution permits.
Firm
Initial Pollution Level
Cost reducing pollution by 1 unit
A
70 Units
$20
B
80 Units
$25
C
50 Units
$10
Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation?
How much higher would the cost of pollution reduction be if the permits could not be traded?
Chapter 5 Solutions
Microeconomics (7th Edition)
Ch. 5 - Prob. 5.1.1RQCh. 5 - Prob. 5.1.2RQCh. 5 - Prob. 5.1.3RQCh. 5 - Prob. 5.1.4RQCh. 5 - Prob. 5.1.5RQCh. 5 - Prob. 5.1.6PACh. 5 - Prob. 5.1.7PACh. 5 - Prob. 5.1.8PACh. 5 - Prob. 5.1.9PACh. 5 - Prob. 5.1.10PA
Ch. 5 - Prob. 5.1.11PACh. 5 - Prob. 5.1.12PACh. 5 - Prob. 5.1.13PACh. 5 - Prob. 5.2.1RQCh. 5 - Prob. 5.2.2RQCh. 5 - Prob. 5.2.3RQCh. 5 - Prob. 5.2.4PACh. 5 - Prob. 5.2.5PACh. 5 - Prob. 5.2.6PACh. 5 - Prob. 5.2.7PACh. 5 - Prob. 5.2.8PACh. 5 - Prob. 5.2.9PACh. 5 - Prob. 5.2.10PACh. 5 - Prob. 5.2.11PACh. 5 - Prob. 5.3.1RQCh. 5 - Prob. 5.3.2RQCh. 5 - Prob. 5.3.3RQCh. 5 - Prob. 5.3.4PACh. 5 - Prob. 5.3.5PACh. 5 - Prob. 5.3.6PACh. 5 - Prob. 5.3.7PACh. 5 - Prob. 5.3.8PACh. 5 - Prob. 5.3.9PACh. 5 - Prob. 5.3.10PACh. 5 - Prob. 5.3.11PACh. 5 - Prob. 5.3.12PACh. 5 - Prob. 5.3.13PACh. 5 - Prob. 5.3.14PACh. 5 - Prob. 5.3.15PACh. 5 - Prob. 5.3.16PACh. 5 - Prob. 5.4.1RQCh. 5 - Prob. 5.4.2RQCh. 5 - Prob. 5.4.3RQCh. 5 - Prob. 5.4.4PACh. 5 - Prob. 5.4.5PACh. 5 - Prob. 5.4.6PACh. 5 - Prob. 5.4.7PACh. 5 - Prob. 5.4.8PACh. 5 - Prob. 5.4.9PACh. 5 - Prob. 5.4.10PACh. 5 - Prob. 5.4.11PACh. 5 - Prob. 5.4.12PACh. 5 - Prob. 5.1CTECh. 5 - Prob. 5.2CTE
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Similar questions
- Use a graph to illustrate the quantity of pollution that would be emitted (a) after a corrective tax has been imposed and (b) after tradable pollution permits have been imposed. Could these two quantities ever be equivalent?arrow_forwardExplain why environmental pollution is regarded as a source of market failure. Briefly describe two different policies which a government might implement to reduce pollution.arrow_forwardFrom the book: Omnivore's Dilemma, chapters 9-12 for a discussion board A) In an economic transaction between a producer and a consumer, an externalized cost or (negative) externality is a cost to someone who is not involved in the transaction. For example, the consumer doesn't pay for it, and the producer doesn't pay for it. Joel Salatin alludes to this concept when he talks about food that is not “honest.” List three externalized costs associated with food production (and consumption), and try to identify the third part(ies) likely to pay for each. Which cost on your list concerns you the most?arrow_forward
- Why is the efficient level of pollution not equal to zero?arrow_forwardBriefly discuss some ways the government could ensure a market with a positive externality could encourage production of the socially optimal output.arrow_forwardWhat are the costs of pollution according to the Lancet Commission on pollution and health? Why are those numbers likely to be an underestimate? Explain.arrow_forward
- It’s common to think that reducing pollution is necessarily costly because to reduce pollution we need to tax firms who will then produce less. But can you think of one example in which pollution might not only be unpleasant but might actually reduce production?arrow_forwardThe Coase Theorem says that if people negotiate the right perform activities that cause externalities, they can always arrive at efficient solutions to problems caused by externalities. Use an example to explain why the people that are harmed are willing to pay to stop pollution.arrow_forwardBriefly explain why a positive externality creates deadweight loss. You can use a graph to support your answer.arrow_forward
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