5. Suppose that Capsule Corporation and Red Ribbon Company are producers of spaceships. In their production processes, each firm emits 50 units of pollution. Now, the government wants to reduce smoke emissions by 40% by issuing tradable permits. The cost of abatement of Capsule Corporation is Php 50 per unit of pollution, while the cost of abatement of Red Ribbon Company is Php 30. Suppose the tradable permits sell at Php 40 and the government allocates the permits equally between the two firms. a. If Red Ribbon Company sells 10 permits to Capsule Corporation, what is the total cost in achieving the goal of reducing emissions by 40%? Instead of using tradeable permits, the government regulates the firms by forcing them to emit 30 units of pollution each. What is the total cost of this policy? What policy is more efficient to implement, the tradeable permits or the government regulation? b.

5. Suppose that Capsule Corporation and Red Ribbon Company are producers of spaceships. In their production processes, each firm emits 50 units of pollution. Now, the government wants to reduce smoke emissions by 40% by issuing tradable permits. The cost of abatement of Capsule Corporation is Php 50 per unit of pollution, while the cost of abatement of Red Ribbon Company is Php 30. Suppose the tradable permits sell at Php 40 and the government allocates the permits equally between the two firms. a. If Red Ribbon Company sells 10 permits to Capsule Corporation, what is the total cost in achieving the goal of reducing emissions by 40%? Instead of using tradeable permits, the government regulates the firms by forcing them to emit 30 units of pollution each. What is the total cost of this policy? What policy is more efficient to implement, the tradeable permits or the government regulation? b.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 4PA

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I know that optimal pollution in b is when marginal cost equals marginal benefit....not sure how to calculate this from the data. also not sure what to do with c.
10
sir can u help me with that
$ R с E -F5 % 5 6 OUL G Refer to Figure 10-7. This graph shows the market for pollution when permits are issued to firms and traded in the marketplace. The equilibrium number of permits is O a. 50. Ob. 1,000. O c. 2,000. O d. 100. Un PRICE (Dollars per unit) H & 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 F8 10 20 30 40 50 60 70 80 90 100 QUANTITY (Units of pollution) *.00 8 8 F9 Supply of Pollution Permits ( 9 JL U Demand for Pollution Permits F10 O --- ) O F11 + F12 PrtSc 1 J [ Insert
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ice 60 MSC 50 40 MPC 30 20 10 MPB-MSB 10 15 20 25 1,000s tickets 30 Suppose a printing company that makes paper tickets is located in a city that ensures that all negative externalities generated by the production of tickets are internalized by the company. With this intervention, what is the market price of each box of 1000 tickets? O $20 O $30 O $25 $10
There are three industrial firms in Happy Valley. Firm Initial Pollution Level Cost of Reducing Pollution by 1 Unit (Units) (Dollars) A 30 5 B 45 10 C 60 20 The government wants to reduce pollution by 90 units, so it gives each firm 30 tradable pollution permits. Because firm has the highest cost of reducing pollution by 1 unit, it would like to another firm. Because firm has the lowest cost of reducing pollution by 1 unit, it is willing to the firm with the highest cost.
10. Understanding different policy options to correct for negativeexternalities Carbon dioxide emissions have been linked to degradation of air quality. The following table lists some potential regulations targeting the amount of airbome carbon dioxide. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. о Public Policy Command-and- Control Policy Tradable Permit System Corrective Subsidy Corrective Тах Trees take carbon dioxide out of the air and convert it to oxygen, so the govemment funds a tree-planting initiative by offering $440 to any citizen who plants a tree. 0 о The government charges factories $440 for every ton of carbon dioxide they emit о о The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. 0 ° ° о The government limits total carbon-dioxide emissions by all factories to 260,000 tons per ten years. Each…
How do taxes, pollution charges, and cap-and-trade work to reduce emissions? When a cap-and-trade is implemented _______.
There are two factories in a small town. Both of them emit carbon dioxide into the air. Their current monthly emissions, as well as their total costs for reducing emissions in 20-ton increments, are listed in the tables below. Factory 1 Current emissions (tons/month) 120 Total cost of reducing emissions by 20 tons/month $50 Total cost of reducing emissions by 40 tons/month Total cost of reducing emissions by 60 tons/month Total cost of reducing emissions by 80 tons/month Total cost of reducing emissions by 100 tons/month $150 $270 $410 $570 Factory 2 Current emissions (tons/month) 160 Total cost of reducing emissions by 20 tons/month $20 Total cost of reducing emissions by 40 tons/month $60 Total cost of reducing emissions by 60 tons/month $110 Total cost of reducing emissions by 80 tons/month $200 Total cost of reducing emissions by 100 tons/month $300
11. Suppose there are 2 types of firms which emit some uniformly-mixed pollution. We'll assume that they are all in different industries and that there are many individual firms. This usually gives the best opportunity for a smoothly functioning market for permits to develop. There are older, not very profitable firms and newer, more profitable firms. The old firms have many long-term employees and have a lot of political clout. The older firms could probably cause a big enough stir to quash any regulatory scheme that cost them money. The new firms have a lot less political clout. MAC Older Firms $5 Newer Firms $3 Initial Emissions 100 200 Number of- Firms 40 30 I a. Describe what would happen if a permit scheme was implemented whereby each firm was allocated (given) permits equal to 40% of its initial emissions. b. Design a permit scheme that would not cost the older firms anything, but would still reduce emissions by 60% overall.
What advantages and disadvantages do you see in using acap-and-trade system to reduce greenhouse gas emissions?What pros and cons do you see in using carbon taxes toachieve this goal? What do you think of the idea of a revenueneutralcarbon tax? If you were a U.S. senator, what type ofpolicy would you support in order to address emissions in theUnited States, and why?