12.1 Assume an economy of two firms and two consumers. The two firms pollute. Firmone has a marginal savings function of MS₁(e) = 5 - e where e is the quantity of emissionsfrom the firm. Firm two has a marginal savings function of MS2(e) = 8 - 2e. Each of thetwo consumers has marginal damage MD(e):=e, where e in this case is the total amountof emissions the consumer is exposed to.a. Graph the firm-level and aggregate marginal savings functions.b. Graph the aggregate marginal damage function.c. What is the optimal level of pollution, the appropriate Pigovian fee, and emissions fromeach firm?

MS1(e) = 5 - e is the marginal savings function for Firm 1 .MS2(e) = 8 - 2e is the marginal…

Answered: 12.1 Assume an economy of two firms and…

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 42P: Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the...

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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?
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?
Do market demand curves reflect positive externalities? Why or why not?
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cap-and-trade and windfall profitsA city called Seoul is suffering from high concentrations of mercury in the air, caused by burningcoal in power plants. There are two of these plants close to the city. The city’s mayor wants touse cap-and-trade to reduce emissions to a reportedly “safe” level of 60 tons. The two firms havethe following marginal benefits of emissions: MB1 = 100 – 2e1, MB2 = 25 – 0.5e2.a. How much mercury will each firm emit? What allowance price will prevail in themarket?Firm 2 hires a smart lobbyist who convinces the government that its profits are relatively low andthat it therefore deserves a generous allowance allocation. The government agrees and allocatesa1 = 20 allowances to firm 1 (for free) and a2 = 40 allowances to firm 2 (for free).b. What are the firms’ profits? Do any of the firms earn windfall profits? [Hint: compareprofits with and without regulation.] Windfall profits have been sharply criticized by consumer advocacy groups and politicians.c. What can…
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EOC 11.04 Two businesses, X and Y, each dump 20 tonnes of pollution into a creek. In an effort to reduce pollution, the government will now require businesses to have a pollution permit to dump pollutants in the creek. Each business receives 10 pollution permits and they can use it to pollute or sell it to the other business (but lose the ability to pollute). To reduce pollution it costs business X $100 per tonne of pollutant eliminated and it costs business Y $50 per tonne of pollutant eliminated. Once the two businesses have traded these permits with each other, what is the likely outcome? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a business X emits 10 tonnes of pollutants and business Y emits 10 tonnes of pollutants. b business X no longer pollutes, and business Y will not lower the amount it pollutes. business X raises its pollution, and business Y will lower how much it pollutes. business Y no longer pollutes, and…
Question 14 The diagram below shows the marginal cost of abatement for each of two firms, A and B. Each firm is initially abating QO units of pollution. MCB Dollars per un L 91 MCA Pelation Abatement Suppose a system of tradable pollution permits is introduced into this market and the equilibrium permit price is p*. Firm B will buy permits from Firm A because its total savings from abating less (areas 1+ 2+ 3) exceed the total costs of Firm A abating more (area 6). Firm B has lower costs of pollution abatement than Firm A. Firm B can buy the permits at a lower price than Firm A. its total savings from abating less (areas 1+ 2+ 3) exceed the cost of buying the permits (areas 2 + 3).
28. Esther and Karin each own a polluting plant. Esther's plant has a marginal disposal cost = 10T ($10 for the 1st ton, $10(2)=$20 for the 2nd ton ..) and Karen's plant = 15T ($15 for the 1st ton, $15(2)=$30 for the 2nd ton ..). Suppose that the government plans to levy pollution emission fees in order to "Suppose the government plans to levy pollution emission fees to reduce total pollution by 30 tons. How many tons will Esther have to reduce the level of pollution from his plant with the pollution emission fee? а. 12 b. 15 C. 18 d. 20 %3D
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Im confused on this question.
it View History s for Business - Goog X s.uts.edu.au/courses/25533/quizzes/59436/take Price of high emissions vehicles Article Link: https://bit.ly/3fbNtrF The following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. O P1 O P2 O P3 PH P3 P₂ O P4 P₁ Bookmarks Profiles Tab Window Help 0 Question 8 1 Price of high emissions vehicles Quiz: Microeconomics News A X + d₁ What is the private value of the last unit traded (or the willingness to pay of the marginal buyer) in the market? Q₂ Q3 JAN Q4 S Social Value Quantity of high emissions vehicles Article Link: https://bit.ly/3fbNtrF The following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. 2 pts S

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