7. Problems and Applications Q7 For any given demand curve for the right to pollute, the government can achieve the same outcome either by setting a price with a corrective tax or by setting a quantity with pollution permits. Suppose there is a sharp improvement in the technology for controlling pollution. Illustrate the effect of this development on the demand for pollution rights. Price of Pollution Quantity of Pollution Demand As a result of the technology change, Demand (?) Suppose the corrective tax policy and the number of pollution permits available do not change in spite of this demand shift. of pollution will change under pollution permits system, and of pollution will change under a corrective tax system.

7. Problems and Applications Q7 For any given demand curve for the right to pollute, the government can achieve the same outcome either by setting a price with a corrective tax or by setting a quantity with pollution permits. Suppose there is a sharp improvement in the technology for controlling pollution. Illustrate the effect of this development on the demand for pollution rights. Price of Pollution Quantity of Pollution Demand As a result of the technology change, Demand (?) Suppose the corrective tax policy and the number of pollution permits available do not change in spite of this demand shift. of pollution will change under pollution permits system, and of pollution will change under a corrective tax system.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?
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