ete the following table with the action each firm will take at this permit price and the amount of pollution each fir Initial Pollution Permit Allocation Final Amount of Pollution Eliminates (Tons of pollution) Action (Tons of pollution) 2. Buy one permit Buy two permits Don't buy/sell Sell one permit ine the total cost of eliminating 6 tons of poll ethod, and enter the amounts in the following ta Sell two permits Total Cost of Elimin bllution Method (Dollars) Regulation
ete the following table with the action each firm will take at this permit price and the amount of pollution each fir Initial Pollution Permit Allocation Final Amount of Pollution Eliminates (Tons of pollution) Action (Tons of pollution) 2. Buy one permit Buy two permits Don't buy/sell Sell one permit ine the total cost of eliminating 6 tons of poll ethod, and enter the amounts in the following ta Sell two permits Total Cost of Elimin bllution Method (Dollars) Regulation
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter10: Externalities
Section: Chapter Questions
Problem 10PA
Related questions
Question
1
![Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.
Complete the following table with the action each firm will take at this permit price and the amount of pollution each firm will eliminate.
Initial Pollution Permit Allocation
Final Amount of Pollution Eliminated
Firm
(Tons of pollution)
Action
(Tons of pollution)
Firm X
Firm Y
Buy one permit
Firm Z
Buy two permits
Don't buy/sell
Sell one permit
Determine the total cost of eliminating 6 tons of pol
ethod, and enter the amounts in the following table.
Sell two permits
Total Cost of Eliminl
bllution
Method
(Dollars)
Regulation
Tradable pollution permits
In this cise, using tradable pollution permits reduces 6 tons of pollution at
using regulation.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3abf8609-a688-48ed-b42c-348368eceb01%2F5ed67e71-ab19-45be-99f4-bc3da1ce3b27%2Famx8l1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.
Complete the following table with the action each firm will take at this permit price and the amount of pollution each firm will eliminate.
Initial Pollution Permit Allocation
Final Amount of Pollution Eliminated
Firm
(Tons of pollution)
Action
(Tons of pollution)
Firm X
Firm Y
Buy one permit
Firm Z
Buy two permits
Don't buy/sell
Sell one permit
Determine the total cost of eliminating 6 tons of pol
ethod, and enter the amounts in the following table.
Sell two permits
Total Cost of Eliminl
bllution
Method
(Dollars)
Regulation
Tradable pollution permits
In this cise, using tradable pollution permits reduces 6 tons of pollution at
using regulation.
![3. Working with Numbers and Graphs Q3
Suppose the government wants to reduce the total pollution emitted by three firms. Currently, each firm is creating 4 tons of pollution, for a total of
12 tons. The government is considering the following two methods to reduce total pollution to 6 tons:
1. The government sets regulation specilying that each of the three firms must cut its pollution in half.
2 The government allocates two tradable pollution permits to each of the three firms. Each permit allows the firm to emit 1 ton of
pollution. Assume the negotiation and exchange of permits are costless.
The following table shows the cost eachy firm faces to eliminate each unit of pollution.
Cost of Eliminating:
Firm X Ficm Y
Firm Z
First ton of pollution
$280
$600
$950
Second ton of pollution
$300
$720
$1,650
Third ton of pollution
$350
$880
$2,500
Fourth ton of pollution
$450
$1,050
$3,550
Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3abf8609-a688-48ed-b42c-348368eceb01%2F5ed67e71-ab19-45be-99f4-bc3da1ce3b27%2F68ox03m_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. Working with Numbers and Graphs Q3
Suppose the government wants to reduce the total pollution emitted by three firms. Currently, each firm is creating 4 tons of pollution, for a total of
12 tons. The government is considering the following two methods to reduce total pollution to 6 tons:
1. The government sets regulation specilying that each of the three firms must cut its pollution in half.
2 The government allocates two tradable pollution permits to each of the three firms. Each permit allows the firm to emit 1 ton of
pollution. Assume the negotiation and exchange of permits are costless.
The following table shows the cost eachy firm faces to eliminate each unit of pollution.
Cost of Eliminating:
Firm X Ficm Y
Firm Z
First ton of pollution
$280
$600
$950
Second ton of pollution
$300
$720
$1,650
Third ton of pollution
$350
$880
$2,500
Fourth ton of pollution
$450
$1,050
$3,550
Suppose the owners of the three firms get together and agree on a trading price of $800 per permit.
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