The figure above shows a national marketable permit system for carbon dioxide.Which of the following areas represents permit revenue, the government's incentiveto monitor the permit program?PermitPrice($/ton)D2P2 = 600D1%3DPT = 300S.%3DAP, = 1501%3DCDQuantity of Permits(% of uncontrolled emissions)5075100QTQ2O A. The sum of areas A, B, C, and D.O B. The sum of areas B and D.OC. Area E.OD. The sum of areas A and B.O E. The sum of areas A, B, and E.2.B

The permit price is determined by the supply of permits and demand for permits. The equilibrium…

Answered: The figure above shows a national…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Confused and uncertain how to solve properly Blank one, two and three: a. Buy one permit b. Buy two permits c. Don’t buy/sell d. Sell one permit e. Sell two permits Blank four: Less or more
What are the estimated abatement cost curves? What would the pollution standard be if they achieved the social optimum? What about an optimal pollution tax?
4
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Assume the following: A community, Manatee, has a small groundwater aquifer, with water to allocate over 2 years. Assume that this resource is non-renewable. Each year is labeled Period 1 and 2, respectively. Use 2 decimal places throughout your work. Water reserves = 12,000 litres, to be allocated over Period 1 & Period 2 Interest rates are at 8% Marginal Benefits: MB1 = 5000 - ½Q1 , MB2 = 5000 - ½Q2 Marginal Costs of extraction: MC1 = 120 , MC2 = 120 (a) What is the optimal allocation of water, under a static efficiency allocation, for both periods? (b) What should the dynamic optimal allocations be (quantities and prices) in Period 1 and Period 2?
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13. The marginal benefit of being able to emit a ton of sulfur dioxide emissions for two firms are given by: MBx = 1000 – (Ex / 2 ) MBY = 600 – (Ey / 3 ) Note that these marginal benefit figures can be interpreted as marginal cost of abating emission down to levels Ex and Ey. Government regulators want to reduce total sulfur dioxide emissions to a total of 1800 tons. a) If the government imposes the same standard of 900 tons maximum emissions on both firms what would be the total cost of abatement (calculated as the aggregated marginal benefits forgone)? b) If the government distributed 900 tradable pollution permits (one ton each) to each firm what would be the final allocation of these permits after the firms trade them? What would be the total cost of abatement in this latter case?
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Refer to the diagram above. Assume public authorities set an optimum emissions standards at 10 tonnes per month. The total cost to firms of reducing emissions to the socially efficient level is equivalent to Question 28 options: A) $50 B) $250 C) area a D) $200
In a market for chemicals, the demand function is P = 200 – Q. The private marginal cost for the chemicals produ cers is MCP = 50 + Q. Pollution generated during the production process causes external marginal cost for the society equal to MCE = 3Q. 4. (a) What specific tax would resultin a competitive market producing the socially optimal quantity of chemicals? Instead of taxation, whatelse can the government do to make sure that the market will work itself out to achieve the socially optimal output? (b)
The figure above shows a national marketable permit system for carbon dioxide. If marginal abatement costs turn out to be high and the government does supply annual permits, what will be the price of a permit? Permit Price ($/ton) S D2 P2 = 600 P7 = 300 A P, = 150 1 %3D D Quantity of Permits 50 QT 75 Q2 100 (% of uncontrolled emissions) OA. P1 Ов. Р2 OC. PT OD. PO O E. Either P0 or P1. B
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