A polluter has abatement costs given byMAC = 405-0.15E, and the emissions causedamages given by MD = 0.1E.The government has a law that requires thepolluter to pay for damages they cause, butthey will only have to pay if the governmentcatches the polluter emitting.If the polluter knows there is only a 68%chance that the government will catch thepolluter, and they choose their optimalemission level, how much total damage willthey cause?Answer:30The correct answer is: $ 172570.7

The expense made when producing goods and services in an economy is known as the cost. It implies…

A polluter has abatement costs given by MAC = 405-0.15E, and the emissions cause damages given by MD = 0.1E. The government has a law that requires the polluter to pay for damages they cause, but they will only have to pay if the government

A polluter has abatement costs given by MAC = 405-0.15E, and the emissions cause damages given by MD = 0.1E. The government has a law that requires the polluter to pay for damages they cause, but they will only have to pay if the government

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Within the remote nation of New Hope, total industrial production is currently creating a constant level of GDP that results in 2,600 million tonnes per year of carbon being released into the atmosphere. The government announced three years ago that a cap on carbon emissions of 2,430 million tonnes would be imposed. This triggered the creation of new firms that began to plant large plantations of trees grown specifically to absorb carbon from the atmosphere and thus earn carbon credits that they would sell to the highest bidder. See table below for the supply of these earned carbon credits available when the program begins. Quantity of Credits Price of Carbon Credits Created $ 1,125 40 1,225 70 1,325 100 1,425 140 1,525 170 1,625 200 1,725 230 a. What will be the initial price for carbon credits? Initial price $ Next, assume that new technology enables the same level of GDP to be achieved with 5 percent less carbon emissions. b. Now what is the price of carbon credits? Price $
If a regulator underestimates the aggregate marginal abatement cost of an industry when determining the “efficient” level of emissions, the true efficient level of emissions will be? (higher, lower or same). Hint: construct a graph with AMAC and MD.
It is discovered that production of painclear damages groundwater quality – this affects just one party: Greenview Nature Park (a park run by the local council which people can access, for free, for recreation). The value of the damage caused is £48 per litre of paint produced – so the pollution damage caused when output is 1 litre=£48, the 2 nd litre causes another £48 of damage, so pollution damage caused when output is 2 litres=£96. This damage happens and is the same whenever XY produces, whatever the level of output (same if it produces 1 litre of or 1 000 000 litres of painclear - each additional litre imposes an additional £48 of pollution costs). The drug has no side effects on consumers. (the clarifying information in red was added on 21/12/23) 1.Create and explain a new diagram which shows relevant costs, price and levels of output if XY produced the optimal quantity of painclear from a societal perspective. 2. Assume XY and Greenview can negotiate. Create and explain 2 new…
The revenues from an emissions-charge approach to controlling climate change would be unusually large in comparison to other pollutants. What circumstances would lead to high revenues?
As abatement efforts increase (pollution is reduced., the marginal benefits from abatement and the marginal costs of abatement decline; rise rise; decline rise; rise decline; decline
What should the government set their corrective tax to if they want to eliminate 7 units of pollution?
A positive externality arises when a third party, outside the market transaction, fails to allocate resources efficiently Pays less for the good or service benefits from a market transaction pays a pollution tax to balance social costs
Provide examples of environmental problems that can be solved with the Pigovian tax.
Describe the key symmetry between a pollution emissions tax and an emissions trading scheme. Outline some reasons you might wish to choose one approach in favour of the other when dealing with an emissions-reduction problem.
The government auctions off 500 units of pollution rights. They sell for 50 dollars per unit, raising total revenue of 25,000 dollars. The policy is equivalent to a corrective tax of _____ per unit of pollution 1. 10 dollars 2. 50 dollars 3. 450 dollars 4. 500 dollars
Over the past 40 years in the United States, the number of vehicles on the road has A) decreased but the number of vehicle miles has increased, and the pollution per car has increased. B) decreased, the number of vehicle miles has decreased, and the pollution per car has decreased. C) increased, the number of vehicle miles has increased, but the pollution per car has decreased D) increased, the number of vehicle miles has increased, and the pollution per car has increased.
BND11.1 Why Do Externalities Cause Deadweight Loss?