8-1. Consider a piece of land covered by old-growth forest which could potentially be clearedand converted to agricultural use. The marginal benefit MB, the marginal private costsMC and the marginal external costs MEC of converting an area r of land are:MB(x)10 – xMC(x)3МЕС(т) (c) Explain graphically and analytically how a regulator could solve the market failureby either (i) imposing an upper limit on land conversion or (ii) levying a Pigou-vian tax on land conversion, and determine the limit and the Pigouvian tax rate,respectively.

Pigouvian tax is simply an extra cost that is levied by the government on the source of negative…

8-1. Consider a piece of land covered by old-growth forest which could potentially be cleared and converted to agricultural use. The marginal benefit MB, the marginal private costs MC and the marginal external costs MEC of converting an area r of land are: MB(x) = 10 – I MC(r) 3

8-1. Consider a piece of land covered by old-growth forest which could potentially be cleared and converted to agricultural use. The marginal benefit MB, the marginal private costs MC and the marginal external costs MEC of converting an area r of land are: MB(x) = 10 – I MC(r) 3

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 7SQ

See similar textbooks

Similar questions

What are the two key characteristics of public goods?
What is a marketable permit and what incentive does it provide for a firm to account for external costs?
A city currently emits 15 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this City. What is the optimal level of sewage for this city? How can you tell?
In a market without environmental regulations, will the supply curve for a film account for private costs, external costs, both, or neither? Explain.
What is a pollution charge and what incentive does it provide for a firm to take external costs into account?
Bower likes to plant trees in his front year. His neighbors also derive pleasure form the trees in his front year. That is, Bower's trees provide a positive externality for the neighborhood. His marginal private benefit and the marginal social benefit (his and that received by his neighbors combined) are represented on the graph below, along with the marginal cost of planting a tree. Price, Cest (oll) $S0.00 45.00. 40.00 A 35.00 0 00 Margiaal Cot 25.00 20.00 15.00 argnel Soeiel Benett je 00 5.00 agnal hirde Bandfil 2 4 5 Quantity (mber of trees) Suppose the neighborhood subsidies Bower's trees. That is, neighbors give him enough money to plant the socially optimal number of trees. What area on the graph would be equal to the net social gain resulting form the subsidy? OA В Oc O A+ B
My dear hero pro expert Hand written solution is not allowed.
1. Suppose that a polluting activity has marginal damage and marginal abatement costs given by MD=2E and MAC = 210 - 3E, respectively. Suppose that the polluter(s) are held liable for damages. (a) What level of emissions will be chosen by polluters. (b) Compute the amount of damages (compensation) that will be paid by polluters and the total of all costs paid by polluters. (c) Compute the social gains from instituting legal liability, relative to the no-abatement outcome.
1. Refer to the table below. Emissions (tons/month) 10 6. Marginal Abatement Cost 15 30 7 50 70 100 120 150 3 185 230 290 1 01 a) The firm faces an emissions charge of $100 per ton/month. If the fim chooses to emit 0 tons/month what is the firm's total cost? b) The firm faces an emissions charge of $100 per ton/month. At what level of emissions does the firm minimize total abatement cost? c) The firm faces an emissions charge of $100 per ton/month. What is the firm's total cost with optimal choice? d) If the firm faced an emissions charge of $150 per ton/month, at what level of emissions does the firm minimize total abatement cost? e) If a regulatory agency simply mandated that the firm could emit a maximum of 5 tons/month and there were no emission charges, what would be the firm's total cost? f) If the firm faced an abatement subsidy of $100 per ton/month, what level of emissions would a firm choose? g) If the firm faced an abatement subsidy of$100 per ton/month, what would be the…
How would you best characterize which class of value a polar bear in the Arctic might represent to most people for purposes of environmental valuation? а. direct use value O b. property value Ос. O c. replacement cost value d. existence value
8
This graph illustrates "Marginal Private Benefits," "Marginal Private Costs," "Marginal Social Benefits," and "Marginal Social Costs" in the market for "Good X." Based upon this graph, it appears as if this good 18.20 12.10- 8.50- 6.10- 3.00- S 0 0 (1) (21) 1,220 (iii) (iv) 3,900 6,250 Marginal Social Costs -(Marginal Private Costs) + (Marginal External Costs) Supply =(Marginal Private Costs) Demand -(Marginal Private Benefits) -(Marginal Social Benefits) quantity 1) is a "club good." 2) is sold by a firm with substantial market power 3) generates a positive externality 4) generates a negative externality