Figure 4.4.4 Refer to Figure 4.4.4 above. The figure shows a family's demand for pollution reduction of nitrogen oxide. What occurs when the pollution authority proposes a reduction of 5 parts per 100 million (pphm)? Question 16 Answer a. The family is willing to pay $5000, and receive a value even larger than that, when 5 pphm of nitrogen oxide are cleaned up. b. The family would spend $1000 to receive 5 pphm of pollution reduction and gain some surplus. c. The family would receive a surplus of $2500, but since the family is not willing to pay for such an initiative, their consumer surplus and expenditures are zero. d. The family would make the necessary expenditures to clean up the pollution, but the

Figure 4.4.4 Refer to Figure 4.4.4 above. The figure shows a family's demand for pollution reduction of nitrogen oxide. What occurs when the pollution authority proposes a reduction of 5 parts per 100 million (pphm)? Question 16 Answer a. The family is willing to pay $5000, and receive a value even larger than that, when 5 pphm of nitrogen oxide are cleaned up. b. The family would spend $1000 to receive 5 pphm of pollution reduction and gain some surplus. c. The family would receive a surplus of $2500, but since the family is not willing to pay for such an initiative, their consumer surplus and expenditures are zero. d. The family would make the necessary expenditures to clean up the pollution, but the

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 7PA

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Figure 4 shows that for any given demand curve forthe right to pollute, the government can achieve thesame outcome either by setting a price with a correctivetax or by setting a quantity with pollutionpermits. Suppose there is a sharp improvement in thetechnology for controlling pollution.a. Using graphs similar to those in Figure 4, illustratethe effect of this development on the demand forpollution rights.b. What is the effect on the price and quantity of pollutionunder each regulatory system? Explain.
The table below shows the demand for pollution permits to emit hydrocarbons in a particular industrial park. Each permit allows the owner to release one tonne of pollutants into the atmosphere. Price perPollution Permit Quantity of Permits $4,500 75 4,000 150 3,500 225 3,000 300 2,500 375 2,000 450 1,500 525 a. If no fee for a pollution permit were charged, how many tonnes of pollutants would be discharged into the atmosphere, assuming a straight-line demand curve? Quantity: tonnesb. Suppose government were to set a fee of $3,500 per pollution permit. How many tonnes of pollutants would now be dumped? What is the total revenue received by government? Quantity: tonnes Total revenue: $ c. Suppose that a new technology allows for a significant reduction in hydrocarbons at a relatively low cost so that the demand for pollution permits in the industrial park drops by 150 tonnes. Assuming that government holds the permit fee at $3,500, how many tonnes of…
There are three industrial firms in the county. -Firm A's initial pollution level is 50 units. Its cost of reducing pollution by 1 unit is $30. -Firm B's initial pollution level is 40 units. Its cost of reducing pollution by 1 unit is $20.-Firm C's initial pollution level is 30 units. Its cost of reducing pollution by 1 unit is $40.The government wants to reduce pollution to 90 units so it gives each firm 30 tradable pollution permits.(i) Who sells permits? (ii) How many do they sell? (iii) Who buys permits? (iv) How many do they buy?
MAC of reducing SO2 emission Tons of SO2 Firm 1 Firm 2 Firm 3 1st 3 2 2nd 12 6 4 Зrd 18 9 6. 4th 24 12 8 5th 30 15 10 6th 36 18 12 The table shows the marginal abatement costs of reducing SO2 pollution. Each firm is emitting 6 tons of SO2 into the air currently. QUESTION 3 Suppose the government doesn't know each firm's costs of abatement. The socially efficient or least cost of reducing the pollution from 18 tons to 6 tons can be brought about by a per-unit SO2 tax of O 13 O 4 O 7 8
EOC 11.04 Two businesses, X and Y, each dump 20 tonnes of pollution into a creek. In an effort to reduce pollution, the government will now require businesses to have a pollution permit to dump pollutants in the creek. Each business receives 10 pollution permits and they can use it to pollute or sell it to the other business (but lose the ability to pollute). To reduce pollution it costs business X $100 per tonne of pollutant eliminated and it costs business Y $50 per tonne of pollutant eliminated. Once the two businesses have traded these permits with each other, what is the likely outcome? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a business X emits 10 tonnes of pollutants and business Y emits 10 tonnes of pollutants. b business X no longer pollutes, and business Y will not lower the amount it pollutes. business X raises its pollution, and business Y will lower how much it pollutes. business Y no longer pollutes, and…
There are three industrial firms in Happy Valley.FirmInitial PollutionLevelCost of ReducingPollution by 1 UnitA 30 units $20B 40 units $30C 20 units $10The government wants to reduce pollution to 60 units,so it gives each firm 20 tradable pollution permits.a. Who sells permits and how many do they sell?Who buys permits and how many do they buy?Briefly explain why the sellers and buyers are eachwilling to do so. What is the total cost of pollutionreduction in this situation?b. How much higher would the costs of pollutionreduction be if the permits could not be traded?
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7. Problems and Applications Q7 For any given demand curve for the right to pollute, the government can achieve the same outcome either by setting a price with a corrective tax or by setting a quantity with pollution permits. Suppose there is a sharp improvement in the technology for controlling pollution. Illustrate the effect of this development on the demand for pollution rights. Price of Pollution Quantity of Pollution Demand As a result of the technology change, Demand Suppose the corrective tax policy and the number of pollution permits available do not change in spite of this demand shift. of pollution will change under (?) of pollution will change under pollution permits system, and corrective tax system.
urco Use the chart below to answer the following question. The Socially Optimal Quantity of Pollution Select one: O a. $83 O b. $250 O c. $500 O d. $167 Marginal social cost, marginal social benefit $500 250 167 0 MSC MSB 83 125 Quantity of pollution The chart above shows the marginal social cost (MSC) and marginal social benefit (MSB) of pollution. Using the information provided in the figure, we can conclude the optimal Pigouvian tax per unit of pollution is:
9. There are three industrial firms in Happy Valley. Initial Pollution Cost of Reducing Firm Level Pollution by 1 Unit A 30 units $20 B 40 units $30 C 20 units $10 The government wants to reduce pollution to 60 units, so it gives each firm 20 tradable pollution permits. a. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation b. How much higher would the costs of pollution reduction be if the permits could not be traded? nswers
2.Is the collection of emissions fees economically efficient in terms of cost effectiveness? How do manufacturers determine the amount of pollution reduction?