8. Assume there are two firms in an industry that generate a nasty pollutant. The government wants to environmental standard or an emissions tax. Using the limit the nasty pollutant by implementing either graph below, answer the following questions: a. How many tons of pollutant are emitted in the absence of government intervention? b. How many tons of pollutant are emitted when the government sets an environmental standard of 4 tons per firm? c. How many tons of pollutant are emitted when the government charges a tax of $250/ton? d. What is the loss in "consumer surplus" (to firms) under the environmental standard? e. What is the loss in "consumer surplus" (to firms) under the tax? f. What is government revenue under the environmental standard? g. What is government revenue under the tax? Marginal benefit 500 400 300 200 100 Environmental standard -Firm A Firm B environmental standard = 4 tons/firm 45 Marginal benefit 500 10 Tons emissions 400 300 200 100 Emissions tax 2.5 Firm A Firm B 5 tax = $250/ton 10 Tons emissions

8. Assume there are two firms in an industry that generate a nasty pollutant. The government wants to environmental standard or an emissions tax. Using the limit the nasty pollutant by implementing either graph below, answer the following questions: a. How many tons of pollutant are emitted in the absence of government intervention? b. How many tons of pollutant are emitted when the government sets an environmental standard of 4 tons per firm? c. How many tons of pollutant are emitted when the government charges a tax of $250/ton? d. What is the loss in "consumer surplus" (to firms) under the environmental standard? e. What is the loss in "consumer surplus" (to firms) under the tax? f. What is government revenue under the environmental standard? g. What is government revenue under the tax? Marginal benefit 500 400 300 200 100 Environmental standard -Firm A Firm B environmental standard = 4 tons/firm 45 Marginal benefit 500 10 Tons emissions 400 300 200 100 Emissions tax 2.5 Firm A Firm B 5 tax = $250/ton 10 Tons emissions

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 6SCQ: Classify the following pollution-control policies as command-and-control or market incentive based....

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Similar questions

An emissions tax on a quantity of emissions from a film is not a command-and-control approach to reducing pollution. Why?
In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between K and L, can you say which one is better and why? In the choice between K. and N, can you say which one is better, and why? If you had to guess, which choice would you think is move likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?