Consider the following diagram showing a marginal damage curve, a marginal abatement cost curve nd an optimal emission fee of $40 per ton. $ $90 MAC $40 $00 100 MD Tons of Emissions 180 Calculate the total dead weight loss that would result if a standard were imposed that resulted in zero emissions. (3)

Is zero pollution possible under a marketable permits system? Why or why not?

California once proposed legislation that would have required 10 percent of its car fleet to be nearly emissions-free by the year 2003. This mandate spurred electric vehicle research. Such vehicles could be powered by photovoltaic cells or by batteries that are recharged using an electrical outlet. Would you agree that it is correct to conclude that electric vehicles that use electrical outlets are emissions-free? What about electric vehicles powered by photovoltaic cells?

Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?

An emissions tax on a quantity of emissions from a film is not a command-and-control approach to reducing pollution. Why?

Economists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.

Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?

Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.) Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs. What is the optimal level of sewage for this city? Why not just pass a law that films can emit zero sewage? After all, the total benefits of zero emissions exceed the total costs.

What is a marketable permit and what incentive does it provide for a firm to account for external costs?

In a market without environmental regulations, will the supply curve for a film account for private costs, external costs, both, or neither? Explain.