A government plans to plant a new forest to provide a recreation facility and help combatclimate change.Estimates of the costs and benefits are shown in Table 1.Table 1PrivateSocialPrivate costsSocial costsbenefitsbenefits£ million1391416From the figure in Table 1, it can be concluded that the forest project will haveA negative production externalities of £9 million.B positive consumption externalities of £16 million.C positive production externalities of £4 million.D total externalities of £25 million.0000

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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↑ The figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. If property rights to the pasture are granted to a farmer so that the farmer owns the pasture, the farmer raises OA 0 goats OB. 40 goats OC. 50 goats OD. 55 goats 10 20 MSC MC MSB 40 50 80 Number of goos
If producers do not consider the negative externalities associated with carbon emissions, then the market price of their goods will be optimal price and the quantity of their goods will be. quantity. than the than the optimal a. higher, lower. b. lower, higher. c. lower, lower. d. higher, higher. None of the above answers is correct. е.
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4. Understanding different policy options to correct for negative externalities Carbon dioxide emissions have been linked to melting of sea ice. The following table lists some potential regulations targeting the amount of airborne carbon dioxide. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Tradable Permit System Public Policy . The government limits total carbon-dioxide emissions by all factories to 250,000 tons per ten years. Each individual factory is given the right to emit 280 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $500 to any citizen who plants a tree. The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. The government charges…
Harvesting forests and other natural resources is one alternative that is useful for funding schools and other public services (Figure 2). Explain what is meant by "payments in kind".
Question 6 1. Public goods have at least one of two characteristics. What are the two characteristics? a. nonrival; nonexcludability b. individual consumption; nonexcludability O d. individual consumption; excludability
9. Best responses for individual contributions to a public good Dmitri and Frances each rent one unit of a two-unit apartment building. The building has two separate furnaces located between the two apartments. The renters each control and pay for the heat their furnaces generate and would choose to increase the temperature of their apartments by 30 degrees if the other never turned on their furnace, given that the marginal private benefit (MB) of the 30th degree is equal to the marginal cost (MC) of 1 degree of heat (assume that the MC of heat is constant and that the MB of heat is decreasing). However, each degree of heat paid for by one not only raises the temperature in that apartment by a degree but also raises the temperature in the other apartment by half a degree. As a result, if Frances were to buy 40 degrees of heat, then Dmitri would need to purchase only |degrees of heat before his personal marginal benefit of the final degree was equal to the marginal cost. Use the blue…
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant marginal external cost (MEC) of $175 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for paper. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $175 per ton. PRICE (Dollars per ton of paper) 500 450 400 350 300 250 200 150 100 50 0 0 O O 2 0 3 U 5 QUANTITY (Tons of paper) The market equilibrium quantity is O O 6 Supply (MPC) Demand (MPB) 7 MSC tons of paper, but the socially optimal quantity of paper production is To create an incentive for the firm to produce the socially optimal quantity of paper, the government…
5. Productivity declines from environmental regulation a) might occur if firms divert capital from spending on new plant and equipment to comply with regulations. b) have been ruled out by economic studies. c) for well over half of the productivity declines of the 1970s. d) might occur if firms invest in new capital sooner than they otherwise would to comply with regulations. e) have cost large numbers of jobs in manufacturing. 6. Consider the diagram, what is the efficient level of pollution cleanup? Total Benefits of $100 Cleanup $75 $50 Total Costs of $25 Cleanup $0 2. Polution Cleanup (tona)
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Paper work review on; Mechanism that give birth to environmental problems.

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