✰Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount itcosts each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one permit from each of the otherfirms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.)Initial Pollution PermitFinal Amount of PollutionEliminatedAllocationCost of PollutionReduction(Dollars)Firm(Units of pollution)Action(Units of pollution)Firm X2▼Firm YFirm Z2Regulation Versus Tradable PermitsDetermine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might needto get information from previous tasks to complete this table.)Total Cost of Eliminating Six Units of Pollution(Dollars)Proposed MethodRegulationTradable PermitsIn this case, you can conclude that eliminating pollution iscostly to society when the government regulates each firm to eliminate acertain amount of pollution than when it allocates pollution permits that can be bought and sold.81°FHCSunnyF2F3F7TabEscF1!7Q0-@22W0+#3EF4$4F5R%5F6T^6YF8Q+&7UF9*8F101DFO(9F11O)0F12PFnLockInsertPrt Sc+5:31 PM6/12/2022=ADelBackspac yn iruSuppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in thearea, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following twomethods:Available Methods to Reduce Pollution1. The government sets pollution standards using regulation.2. The government allocates tradable pollution permits.Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces toeliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) isprohibitively expensive.Cost of Eliminating the...Second Unit of PollutionFirst Unit of PollutionFirm(Dollars)(Dollars)Third Unit of Pollution(Dollars)1501,050Firm X80100800450Firm Y200Firm Z1209581°FSunnyF38+#F4$HF5a%F611I'F7CF8J+&F9★CalDF10(F11F12Lock5:30 F6/12/202Prt Sc

Calculating using the regulation method,

Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount it costs each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one permit from each of the other firms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.) Initial Pollution Permit Final Amount of Pollution Eliminated Allocation Cost of Pollution Reduction (Dollars) Firm (Units of pollution) Action (Units of pollution) Firm X 2 Firm Y Firm Z 2 Regulation Versus Tradable Permits Determine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might need to get information from previous tasks to complete this table.) Total Cost of Eliminating Six Units of Pollution Proposed Method (Dollars) Regulation Tradable Permits 2

Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount it costs each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one permit from each of the other firms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.) Initial Pollution Permit Final Amount of Pollution Eliminated Allocation Cost of Pollution Reduction (Dollars) Firm (Units of pollution) Action (Units of pollution) Firm X 2 Firm Y Firm Z 2 Regulation Versus Tradable Permits Determine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might need to get information from previous tasks to complete this table.) Total Cost of Eliminating Six Units of Pollution Proposed Method (Dollars) Regulation Tradable Permits 2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A T, C Pollution The above graph illustrates the marginal pollution cost per ton of goods that a firm produces. Assume the firm currently has no regulation and will produce at the point Qmax. Suppose a pollution tax per ton is placed on the firm (T1). What area represents the tax paid by the firm? C only A+B A+B+C
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Suppose the the government has set the trading price of a permit at $126 per permit. Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount it costs each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one permit from each of the other firms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.) Firm Firm A Firm B Firm C Initial Pollution Permit Allocation (Units of pollution) 2 2 2 Regulation Versus Tradable Permits Action Proposed Method Regulation Tradable Permits Final Amount of Pollution Eliminated (Units of pollution) Cost of Pollution Reduction (Dollars) Determine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might need to get information from previous tasks to complete this table.) Total Cost of Eliminating…
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