3. Achieving lower pollutionSuppose the government decides to raise the gasoline tax as a way to reduce air pollution and traffic congestion to their optimal levels.Which of the following describes why corrective taxes, such as the gasoline tax, are unlike most other taxes?Other taxes are typically used to cover general spending, but funds from corrective taxes can be used only to alleviate pollution.Other taxes get passed on from businesses to consumers, whereas corrective taxes do not.Corrective taxes alter incentives, whereas other taxes typically do not.Corrective taxes bring the allocation of resources closer to the social optimum and, thus, improve economic efficiency. 5. Private solutions to correct for externalitiesConsider the following scenario:Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstreaminto a lake that has become thick with algae and polluted due to the minerals in the waste matter. The local office of a nonprofitenvironmental organization collects enough donations to stop the farm's pollution.Which of the following types of private solutions to the externality of pollution has occurred in this case?Moral codes and social sanctionsCharitiesIntegration of different types of businesses through merger or acquisitionContractsIt's important to note that sometimes private solutions to externalities do not work. For example, this occurs when communications barriers or socialcustoms are important enough relative to the potential gains involved that

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3. Achieving lower pollution Suppose the government decides to raise the gasoline tax as a way to reduce air pollution and traffic congestion to their optimal levels. Which of the following describes why corrective taxes, such as the gasoline tax, are unlike most other taxes? Other taxes are typically used to cover general spending, but funds from corrective taxes can be used only to alleviate pollution. Other taxes get passed on from businesses to consumers, whereas corrective taxes do not. Corrective taxes alter incentives, whereas other taxes typically do not. Corrective taxes bring the allocation of resources closer to the social optimum and, thus, improve economic efficiency.

3. Achieving lower pollution Suppose the government decides to raise the gasoline tax as a way to reduce air pollution and traffic congestion to their optimal levels. Which of the following describes why corrective taxes, such as the gasoline tax, are unlike most other taxes? Other taxes are typically used to cover general spending, but funds from corrective taxes can be used only to alleviate pollution. Other taxes get passed on from businesses to consumers, whereas corrective taxes do not. Corrective taxes alter incentives, whereas other taxes typically do not. Corrective taxes bring the allocation of resources closer to the social optimum and, thus, improve economic efficiency.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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22.) Consider a market subject to a negative externality cause by pollution. Suppose that, initially, the government is dealing with this negative externality using a Pigouvian tax. The government is considering switching its handling of the negative externality to a scheme where it auctions off pollution licenses to producer instead. If the government makes this policy change, then producer surplus will and government surplus will a.) Increase, increase b.) Decrease, decrease c.) Decrease, increase d.) None of the above 23.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their town park are given by PıD =100–QP_PMD =200–2Q", and Pc³ =300–3Qº respectively. What is the slope of the MBS curve for statues? а.) -4 b.) -5 с.) -6 d.) -7 24.) Suppose that, in the above example, statues are sold in a competitive market with a supply curve given by PS =516+QS. What quantity of statues should the local government install in the park to maximize total surplus?…
4. Understanding different policy options to correct for negative externalities Carbon dioxide emissions have been linked to melting of sea ice. The following table lists some potential regulations targeting the amount of airborne carbon dioxide. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Tradable Permit System Public Policy . The government limits total carbon-dioxide emissions by all factories to 250,000 tons per ten years. Each individual factory is given the right to emit 280 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $500 to any citizen who plants a tree. The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. The government charges…
Economics: Public Economics Question: 1 Table 3 The following table shows the marginal costs for each of four arms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second unit of pollution it would cost an additional $67. Refer to Table 3. If the government charged a fee of $90 per unit of pollution, how many units of pollution would the arms eliminate altogether? Guess: 11 Question 2: Refer to Figure 5 (Graph 4). Which graph illustrates a pollution permit program? a. the left graph b. both graphs c. the right graph d. neither graph Thank you for your help and support Instructor Agent!
3. The effect of negative externalities on the optimal quantityof consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant external cost of $315 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for paper. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $315 per ton. (? 900 810 Social Cost 720 630 540 450 Supply (Private Cost) 360 270 Demand 180 (Private Value) 90 1 2 6 QUANTITY (Tons of paper) The market equilibrium quantity is v tons of paper, but the socially optimal quantity of paper production is v tons. To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a of S per ton of paper. PRICE (Dollars perton of paper)
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3. The effect of negative externalities on the optimal quantity of consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant external cost of $105 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for paper. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $105 per ton. PRICE (Dollars per ton of paper) 700 630 560 490 420 350 280 210 140 70 0 0 1 O O 2 ☐ ■ 3 O 4 5 QUANTITY (Tons of paper) ☐ 6 Supply (Private Cost) Demand (Private Value) 7 Social Cost ?
(Figure: Market 5) Use the graph to answer the question. Price Supply $12 $10 $8 $6 $4 | Marginal social benefit $2 Demand 2 6 8 10 12 Quantity The graph shows the marginal social benefit, demand, and supply curves in the toothbrush market. Market forces would yield a quantity of whereas the socially optimal quantity is four; six four; eight six; four O eight; four %24
2. Categories of goods Complete the following table by selecting the appropriate definition for each of the given terms. Term Definition Nonexcludable Nonrival If a good is both nonexcludable and nonrival in consumption, then it is
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3. The effect of negative externalities on the optimal quantityof consumption Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $140 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for bolts. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $140 per ton. PRICE (Dollars per ton of bolts) 400 360 320 280 200 160 120 80 40 0 0 O ☐ 1 O n ☐ 2 0 O ☐ O 5 QUANTITY (Tons of bolts) ☐ Supply 6 (Private Cost) Demand (Private Value) 7 Social Cost (?) The market equilibrium quantity is tons of bolts, but the socially optimal quantity of bolt production is tons. To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts. per ton
Refer to the image Ch. 18, Example 18.7 - 'The Demand for Clean Air' Why is clean air a public good? What does Fig. 18.16 (image provided) show about the willingness to pay for clean air?