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- Consider an economy which is heavily dependent on tourism. To boost tourist revenue, the government has decided to reclaim the sea to build a theme park at the coastal area. This has resulted in sea pollution, reduces the fish stock and threaten the livelihoods of fishermen in the vicinity. (a)Describe the type of externality exist in the scenario. Explain with a suitable diagram and highlight the area of the efficiency loss. (b)Explain the remedial action to rectify the externality problem.Compare and contrast the following concepts and indicate their implications: in the context of city formation, external economies of scale in production vs economies of scale in production cheggThe marginal damage cost equation for carbon monoxide (CO) in urban areas is: MDCU = 36E; The marginal damage cost equation for CO in rural areas is: MDCR = 6E.The marginal abatement cost equation for CO is: MAC = 400 - 4E What are the socially efficient individual standards for carbon monoxide? What is the total abatement cost in each area under this scheme? What is the total compliance cost under this scheme?
- Construct a sample problem about External Rate of Return.If polluter 1 emits 10 tons polluter 2 emits 25 tons of pollutant.MD=5+2e and MAC=15+2a. If abatement and emissions are at their efficient levels for specified this set of damages and abatement cost, by how much would the minimum total cost to society change if damages would discovered to be MD=4+2.5e instead? (question has that much info and also clear)Write the formula of the B/C ratio?
- The supply of fertilizer is described by the following equation: Qs= 3,000P where Qs is the supply per year and P is the price of fertilizer per ton. The demand for fertilizer is described by: Qd= 500,000 − 20,000P where Qd is tons of fertilizer demanded per year. The marginal external costs of $30 are associated with the production of each ton of fertilizer due to the pollution related to fertilizer production. explain your answers by showing your work. a) Assuming that fertilizer is sold in a competitive market, what is the market price?The EPA determined the presence of a public health and ecological damage externality cost in dollars of MEC=0.020 associated with Q units of nitrogen oxides output of a chemical process per month.There was no evidence of external benefit. The marginal social benefit was estimated as MSB=50-0.4Q and the marginal social cost as MSC=2+ 0.4Q mpenveo What is the socially conscious solution?Which one of these elements of the total cost of a product are not generally taken into account, resulting in the externality: Cost to meet regulations, pay taxes, etc., per product Cost of Product (over its lifecycle) to the Cost to society that is not captured in the product price or government regulation
- a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $40 per unit and the external cost at $20 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area. MPC MPB 100 Tools 90 80 MSB MSC 70 60 50 40 30 20 10 369 1215 1821 24 27 30 33 36 39 42 45 Quantity per period b. What are the most desirable price and quantity from society's point of view? Price: $ Quantity: c. If government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to producers per unit? Value of subsidy: $ d. if, instead, government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to consumers per unit? Value of subsidy: $ PriceSuppose the marginal damage cost is estimated to be MD = 0.8E and the marginal abatement cost is estimated to be MAC = 90 - E. Find the following: a) The socially efficient level of emission b) How much emission could be reduced from the uncontrolled level? c) the Total Social Costs d) Draw the graphs and show your calculations.A Pulp and Paper mill in Port Alberni releases pollution into nearby wetlands, and the associated health and ecological damages are not considered in the private market because the mill owns the rights to the wetlands. The marginal benefits and are given by the following functions: Marginal Private Benefit = 800 - 0.5Q Marginal Private Cost = 20+0.3Q Marginal External Benefit = 0 Marginal External Cost = 0.4Q A private citizens group is negotiating with the Port Alberni Paper mill to produce less output. For the 800th unit of output, determine the range within which a payment would be acceptable to both parties
