Principles of Microeconomics California Edition 2nd Edition
2nd Edition
ISBN: 9780393622089
Author: Dirk Mateer, Lee Coppock
Publisher: W. W. Norton
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Chapter 7, Problem 8SP
(a)
To determine
Estimate the total cost to both firms in meeting the goo-emissions standards.
(b)
To determine
Explain whether the firm is willing to trade permit with one another.
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Firm A currently dumps 223 tons of chemicals into the local river. Firm B currently dumps 192 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives each firm 10 pollution permits. The abatement costs of one ton of pollution is $173 for Firm A and $76 for Firm B. What would be the total cost of reducing pollution, if the firms are allowed to trade permits between each other?
Firm A currently dumps 243 tons of chemicals into the local river. Firm B currently dumps 126 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives Firm A 61 pollution permits and gives Firm B 65 pollution permits. The abatement costs of one ton of pollution is $113 for Firm A and $165 for Firm B. What would be the total cost of reducing pollution, if the government does NOT allow the firm to trade the permits between each other?
Consider a lake found in the village of Sturbridge, and then answer the questions that follow.
The village has a campground whose visitors use the lake for recreation. The village also has a fish cannery that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the fish cannery's waste decreases the campground's economic profit.
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Principles of Microeconomics California Edition 2nd Edition
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