37. (Figure: Three Firms that Pollute) Use Figure: Three Firms That Pollute. If the city imposes tons of mercury, and firm A a tax of $400 per ton of pollution, firm B will produce will produce tons of mercury than will firm C. Figure: Three Firms That Pollute Marginal benefit of individual polluter 0000 $1,000 900 800 700 600 500 400 300 200 100 0 Firm A Firm B Firm C 100 200 300 400 500 600 700 800 900 1,000 Quantity of mercury (tons) 700; 200 fewer 300; 500 more 300; 200 fewer 600; 200 fewer

37. (Figure: Three Firms that Pollute) Use Figure: Three Firms That Pollute. If the city imposes tons of mercury, and firm A a tax of $400 per ton of pollution, firm B will produce will produce tons of mercury than will firm C. Figure: Three Firms That Pollute Marginal benefit of individual polluter 0000 $1,000 900 800 700 600 500 400 300 200 100 0 Firm A Firm B Firm C 100 200 300 400 500 600 700 800 900 1,000 Quantity of mercury (tons) 700; 200 fewer 300; 500 more 300; 200 fewer 600; 200 fewer

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

500 450 The graph on the right may help in answering question 25 400 350 300 250 200 150 100 50 O 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Quantity Demand MC Exter nality MC private MC Social A competitive tire manufacturing industry spews emissions into the air at47 per tire a marginal cost of 1.5-q, where q is the quantity of tires produced per month (in thousands). The industry marginal cost, excluding the cost of emissions (private marginal cost), is 4 + 4•q, expressed in $ per tire. The inverse demand curve for tires is p = 480 - 3-q, also expressed in $ per tire. In order to achieve the socially efficient level of tire production, which takes into account the optimal level of air pollution, the government levies a tax on the industry. What is the efficient pollution tax? $84 per tire $101 per tire $152 per tire Price
Please note that the red line is marginal cleanup cost
4 This is a graph reprinted from Section 12.1 the Economics of Pollution. Please explain the graph with particular attention paid to why there are two supply curves. How can a government use this graph to establish pollution controls?
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for steel. Suppose that a steel manufacturing plant dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the plant. Producing an additional ton of steel imposes a constant marginal external cost (MEC) of $165 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for steel. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $165 per ton. PRICE (Dollars per ton of steel) 1100 990 880 770 660 550 440 330 220 110 0 0 + 1 O ☐ O 2 0 H 3 ▬ The market equilibrium quantity is O 4 5 QUANTITY (Tons of steel) ☐ ☐ 6 Supply (MPC) Demand (MPB) 7 MSC ? tons of steel, but the socially optimal quantity of steel production is To create an incentive for the firm to produce the socially optimal quantity…
(Figure: The Socially Optimal Quantity of Emissions from Coal Production) Use Figure The Socialy Optimal Quarety of Emissions from Coal Production in the figure, firms are the only beneficiaries of polution, and costs are borne solely by others in the society. Without government intervention Marginal social cost, marginal social benefit MSC of pollution MSB of pollution Quantity of pollution emissions (tons) O The outcome cannot be determined without more information Orms will continue to polute until the marginal benefit to them is $200 O firms will continue to pollute until the marginal benate to them is zero. O the quantity of pollution will be optimal.
3
5. Property rights and market failures Loggers are much likely to supply wood to the market if property rights are not enforced. In the presence of market failures, public policy can improve economic efficiency. Classify the source of market failure in each case listed. Market Market Failure Power Externality A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town downstream. A single grocery store is the only source of food in a small town, giving the store the ability to influence the price of food.
- My O 4 Schol 15909/quizzes/855329/take 1. Concepts & Price (5) OX₁ OS OX OD % Refer to Graph 3 below. Which curve represents the marginal private benefit? Graph 3 Help O Pa 5 A XX- 930 .C 40 6 C P 4 & 7 8 lyp MOX 4+ 8 Maket for the product of wwater polluting firm Quantity Chat 144 9 O htt C
7. (Market for Pollution Rights) The graph in page 302 shows the market for pollution rights. a. If there are no restrictions on pollution, what amount isdischarged? b. What is the quantity supplied and the quantitydemanded if the government restricts the amount ofdischarge to Q* but gives the permits away? c. Where is market equilibrium if the government sells thepermits at the market-clearing price? Illustrate this on the graph.
4. Consider the market for face masks. an d) Briefly explain whether you agree or disagree with the following statement: "Carbon emissions from cars cause breathing difficulties for people with respiratory illnesses. The total benefit to society is greatest when we completely eliminate the carbon emissions."
5. The marginal benefits (MB) and marginal damage costs (MD) for daily particulate air pollution in East St. Louis, Illinois are given in the following figure: $ per pound per day 2 MB MD 1 Pounds 1,000 2,000 per day a. What is the efficient level of pollution in pounds per day? Explain. b. If East St. Louis imposes an absolute ban on particulate pollution, how large would be the deadweight loss? (Be quantitative.) c. If instead of an absolute ban, the city levels a Pigouvian tax on polluters, how large should it be per pound per day to achieve efficiency? What will be the total revenues to the government? What will be the gain or loss to residents compared to the absolute ban? What will be the after tax gain or loss to polluters compared to the absolute ban? d. If instead of an absolute ban, the right to be free of pollution is given to the residents and they are allowed to bargain with the polluters, what level of pollution will Coase expect to be bargained between polluters and…
2. Study Questions and Problems #2 Suppose a car sells for $21,000 in a market with no pollution restrictions. When there are pollution restrictions, the car will sell for $21,000.