How should the government initially allocate transferable emissions permits among firms if it wants the target level of emissions to be achieved at minimum cost?O A. Give permits to firms in direct proportion to the amount of emissions each generates.OB. Give more permits to firms that have lower marginal abatement costs.OC. Give each firm the same number of permits.OD. It doesn't matter how the permits are allocated as long as the firms can buy and sell them in a competitive market.

The objective of the question is to understand the most cost-effective way for the government to…

Answered: How should the government initially…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which statement about externalities is wrong? O Markets are typically not efficient in dealing with externalities O Externalities can be positive or negative O A firm naturally takes into account negative externalities that result from their production O Interventions such as carbon taxes can help correct externalities gative externalities imply that the social cost is high than the internal (or private) cost
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
All of the following statements about taxes on emissions and subsidies to abatement are true except: Select one: O a. The profit-maximizing response by firms to a tax on emissions is to set their marginal abatement costs equal to the tax. The profit-maximizing response by firms to a subsidy to abatement is to set their marginal abatement costs equal to the subsidy. O b. Taxes always reduce firm profits; subsidies often increase firm profits. O c. Both taxes on emissions and subsidies to abatement can in principle achieve the socially efficient outcome in the short run and the long run. O d. A and B are false. O e. B and C are false.
According to economists what is the optimal amount of pollution? O a. The optimal amount of pollution is where private costs equal social costs O b. Pollution should be reduced to a level as determined by government regulation O c. None, the goal is to completely eliminate pollution d. The point where the marginal benefit from further pollution reduction equals the marginal cost of further reduction
Carbon dioxide emissions have been linked to increased air pollution. Suppose that, to reduce carbon dioxide emissions, the government charges factories $100 for every ton of carbon dioxide they emit. This is an example of: O Effluent taxation O Emissions trading O Command-and-control policy (regulation) Which of the following is seen as one of the growing pains of emissions trading? O Hot spot problem Tragedy of the commons O Transaction costs
i will 10 upvotes urgent .
The many identical residents of some cities love drinking apple juice. The cost of producing a bottle of apple juice is $5, and the competitive suppliers sell it at this price. Each resident has the following willingness to pay for the tasty refreshment: Quantity Willingness to Pay (Dollars) First bottle 10 Second bottle 8 Third bottle 6. Fourth bottle 4 Fifth bottle 2 Further bottles
In the diagram, at which point is this consumer willing to give up more fossil fuels for an additional unit of renewable fuels than she must give up according to her budget constraint? Fossil Fuels B. BL2 IC2 BL BL3 E Renewable Fuels X X3 OA. A Ов. в OC.C OD. D OE. E
Atlantis produces only coral beads and exotic shells. The table shows the marginal benefit and marginal cost schedules for exotic shells. If Atlantis produces 43 exotic shells, the marginal benefit from exotic shells To achieve allocative efficiency, Atlantis must O A. is less than; increase OB. exceeds; increase O C. is less than; decrease O D. exceeds; decrease the marginal cost of exotic shells. the quantity of exotic shells produced. 1 Exotic shells (per month) 39 40 1 42 43 4 41 44 Marginal benefit (beads per shell) 11 9 7 5 Marginal cost 4 1 1 2 3 5 17 29

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