REVEL CODE+MICROECON-EBK+STUDENT PACKET
19th Edition
ISBN: 9780135623053
Author: HUBBARD/BOYLE
Publisher: Pearson Custom Publishing
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Chapter 5, Problem 5.2CTE
To determine
Efficient level of pollution.
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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 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?
How much higher would the cost of pollution reduction be if the permits could not be traded?
Chapter 5 Solutions
REVEL CODE+MICROECON-EBK+STUDENT PACKET
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_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_forwardEconomists Kenneth Chay and Michael Greenstone found that in the two years following the passage of the Clean Air Act of 1970, the sharp reduction in air pollution also led to a decline in infant deaths. Although this and other studies provide compelling evidence of the link between pollution and infant health, it is not clear that reductions from the much lower levels of ambient pollution today would have the same effect. Which of the following reasons could explain this? A. Today, the level of pollution is much higher. Therefore, it will take a much larger reduction in air pollution to reap benefits similar to those in 1970. B. When levels of pollution are high, the marginal benefit of reducing pollution also is high. It follows therefore that the benefit of reducing air pollution in 1970 would be much higher than the benefit from a proportional reduction in air pollution today when the level of pollution is much lower. C. When levels of pollution are…arrow_forward
- Define pollution charge and will our economy be able to control pollution? Share your thoughts in a paragraph.arrow_forwardIt’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_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_forward
- Economists define the efficient amount of fund pollutants as the amount that minimizes the sum of damage and control costs. Using this definition, they derive two general rules, one of which is that the efficient level of pollution is not generally zero. Briefly explain why this is true.arrow_forwardWhat are the four core concepts of environmental economics? Briefly discuss each concept.arrow_forwardIn the graph below, circle the efficient level of emissions.arrow_forward
- Briefly explain what is meant by the term "externality" and how it occurs. What are some ways (name at least 2) in which a negative externality can be corrected?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_forwardThere are three industrial firms in Happy Valley.FirmInitial PollutionLevelCost of ReducingPollution by 1 UnitA 30 units $20B 40 units $30C 20 units $10The government wants to reduce pollution to 60 units,so it gives each firm 20 tradable pollution permits.a. 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 eachwilling to do so. What is the total cost of pollutionreduction in this situation?b. How much higher would the costs of pollutionreduction be if the permits could not be traded?arrow_forward
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