4. The Fireyear and Goodstone Rubber Companies are two firms located in the rubber capital of the world. These factories produce finished rubber and sell that rubber into a highly competitive world market at the fixed price of £60 per ton. The process of producing a ton of rubber also results in a ton of air pollution that affects the rubber capital of the world. This 1:1 relationship between rubber output and pollution is fixed and immutable at both factories. Consider the following information regarding the costs (in £) of producing rubber at the two factories (Q, and Qg): Fireyear Goodstone Costs: 300 + 20,² Costs: 500+ Q² Marginal costs: 4Q, Marginal costs: 20

4. The Fireyear and Goodstone Rubber Companies are two firms located in the rubber capital of the world. These factories produce finished rubber and sell that rubber into a highly competitive world market at the fixed price of £60 per ton. The process of producing a ton of rubber also results in a ton of air pollution that affects the rubber capital of the world. This 1:1 relationship between rubber output and pollution is fixed and immutable at both factories. Consider the following information regarding the costs (in £) of producing rubber at the two factories (Q, and Qg): Fireyear Goodstone Costs: 300 + 20,² Costs: 500+ Q² Marginal costs: 4Q, Marginal costs: 20

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 8PA

See similar textbooks

Similar questions

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?
Economists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.
17. Two firms, A and B, each currently dump 50 tonnes of chemicals into the local river. From now on both firms will require a pollution permit for each tonne of pollution dumped. The government gives each firm 20 tonnes' worth of pollution permits, which it can either use or sell to the other firm. It costs Firm A $100 for each tonne of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each tonne of pollution that it eliminates before it reaches the river. After the two firms buy or sell pollution permits from each other, what would we expect that Firm A and Firm B will dump? a Firm A will dump 10 fewer tonnes of pollution into the river, and Firm B will dump 50 fewer tonnes of pollution into the tiver. b. Firm A will dump 50 fewer tonnes of pollution into the iver, and Firm B will dump 10 fewer tonnes of pollution into the river. c. Firm A will dump 50 fewer tonnes of pollution into the river, and Firm B will dump 10 more tonnes of pollution into…
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).
Suppose there are two firms producing 6 units of pollution each. The government decides that they want to reduce the total pollution to 6 units, so they issue 3 pollution permits to each firm. The cost of abating the pollution for each firm are given in the following table: FIRM A Unit of pollution FIRM B Unit of pollution Marginal Cost of cleaning up this unit of pollution $6 $14 $25 S40 $60 $90 Marginal Cost of cleaning up this unit of pollution 535 $70 $120 $180 $280 $390 If the two firms work together to reduce the total cost of cleaning up the pollution, how many permits will be traded and which firm will sell the permits and which firm will buy the permits?
1. A firm's marginal abatement cost function is given by MAC = 200-5E. Suppose that, after adopting new abatement technology, the firms marginal abatement function becomes MAC = 160-4E. Costs are in dollars per tonne and emissions are in tonnes per year. The firm is given 20 tradeable pollution permits (each permit allows it to emit one tonne of pollution) and the current market price per permit is $100. a)Given no change in the permit price how many tonnes of pollution will the firm emit? b)What will be the firms total abatement cost? Will it buy or sell permits and how many? c) What will be the net cost to the firm after trading? What will be the net gain to the firm from adopting the new abatement technology
The table below shows current carbon emissions and the cost of reducing carbon emissions for three industrial firms. The government introduces a cap-and-trade policy to regulate carbon emissions. The total cap on emissions is 180 tonnes of carbon, and each firm receives an initial allocation of tradable permits for 60 tonnes of carbon emissions. Current carbon emissions Firm A B C (tonnes) 80 100 70 a. Firm A will buy 40 emission ✓ Firm C. Cost of reducing emissions by 1 ton ($) 150 200 50 Firm B will sell 20 emissior Firm C. Instructions: Round your answer to the nearest whole number. b. To break even, the selling firm must receive $ 150
8. Assume there are two firms in an industry that generate a nasty pollutant. The government wants to limit the nasty pollutant by implementing either an environmental standard or an emissions tax. Using the 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 4 5 Marginal benefit 500 10 Tons emissions 400 300 200 100 Emissions tax 2.5 Firm A…
Table 10-5 The following table shows the marginal costs for each of four firms (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. Marginal Cost to Eliminate Firm (Dollars) First Unit Second Unit Third Unit Fourth Unit 54 67 82 107 57 68 86 108 54 66 82 107 D 62 73 91 111 Refer to Table 10-5. Suppose the government wants to reduce pollution from 16 units to 8 units and auctions off 8 pollution permits to achieve this goal. Which of the following is a likely auction price of the permits? S69 wered $85 swer $79 $87 ABC
Table 10-5 The following table shows the marginal costs for each of four firms (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. Marginal Cost to Eliminate Firm (Dollars) First Unit Second Unit Third Unit Fourth Unit 54 67 82 107 57 68 86 108 54 66 82 107 D 62 73 91 11 Refer to Table 10-5. If the government wanted to eliminate exactly 7 units of pollution, which of the following fees per unit of pollution would achieve that goal? S85 $87 er $71 $74 AB
27. Esther and Karin each own a polluting plant. Esther's plant has a marginal treatment cost = 5T ($5 for the 1st ton, 5(2)=$10 for the 2nd ton ...) and Karen's plant = 8T ($8 for the 1st ton, 8(2)=$16 for the 2nd ton .). Suppose that the government plans to levy pollution emission fees to reduce the total pollution by 20 tons. How much pollution emission fees ($) will need to be collected to meet the government's target? In the range of a. 50 to 59 b. 60 to 69 C. 70 to 79 d. 80 to 89
Kip and Yale run separate mining companies in the same forest. Both pollute the river flowing through the forest with debris from their work. In the table below, the first row shows the current level of debris that makes its way into the river from their work. The following table set out information that shows how much it would cost each company to reduce its pollution by additional increments of 10 pounds. Kip Yale Current debris in pounds 60 80 Cost of reducing debris by 10 pounds $5 $2 Cost of reducing debris by a second 10 pounds $10 $4 Cost of reducing debris by a third 10 pounds $15 $6 Cost of reducing debris by a fourth 10 pounds $20 $8 Cost of reducing debris by a fifth 10 pounds $25 $10 If each mining company is forced to cut its debris in half, the respective cost to Kip and Yale will be Question 4 options: $5, $2 $10, $4 $30, $20 $30, 12