Figure: The Socially Optimal Quantity of Emissions from Coal Production) Use Figure The Socially Optimal Quarety of Emissions from Coal Production in the figure, firms are the only beneficiaries of pollution, and costs are borne solely by others in the society. Without government intervention Marginal social cost, marginal social benefit MSC of pollution MSB of pollution Quantity of pollution emissions (tons) $200 O The outcome cannot be determined without more information Otrms will continue to polute until the marginal benefit to them is O firms will continue to pollute until the marginal benatt to them is zero. O the quantity of pollution will be optimal.

Figure: The Socially Optimal Quantity of Emissions from Coal Production) Use Figure The Socially Optimal Quarety of Emissions from Coal Production in the figure, firms are the only beneficiaries of pollution, and costs are borne solely by others in the society. Without government intervention Marginal social cost, marginal social benefit MSC of pollution MSB of pollution Quantity of pollution emissions (tons) $200 O The outcome cannot be determined without more information Otrms will continue to polute until the marginal benefit to them is O firms will continue to pollute until the marginal benatt to them is zero. O the quantity of pollution will be optimal.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Only typed answer You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 3Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 14Q. Instruction: Round your answers to the nearest two decimal places. a. What is the socially efficient level of output? units b. Given these costs and market demand, how much output would a competitive industry produce? units c. Given these costs and market demand, how much output would a monopolist produce? units d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output. Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit. Pollution taxes…
500 450 The graph on the right may help in answering question 25 400 350 300 250 200 150 100 50 O 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Quantity Demand MC Exter nality MC private MC Social A competitive tire manufacturing industry spews emissions into the air at47 per tire a marginal cost of 1.5-q, where q is the quantity of tires produced per month (in thousands). The industry marginal cost, excluding the cost of emissions (private marginal cost), is 4 + 4•q, expressed in $ per tire. The inverse demand curve for tires is p = 480 - 3-q, also expressed in $ per tire. In order to achieve the socially efficient level of tire production, which takes into account the optimal level of air pollution, the government levies a tax on the industry. What is the efficient pollution tax? $84 per tire $101 per tire $152 per tire Price
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3. If the government issues tradeable pollution permits, does it matter for economic efficiency (social welfare) whether all firms receive the same amount of permits, or whether some firms receive more permits than others?
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