Local government in Victoria has responsibility for garbage collection from households andbusiness in its region. Local governments contract with waste management suppliers to collectand dispose of their garbage. Contractors must pay to the Victorian state government a levy of$65.90 for each tonne of garbage disposed of as landfill. Assume that the market for disposingof garbage as landfill is perfectly competitive.(a) Use the demand/supply model to show how the levy on disposing of garbage inlandfill affects the market outcome. Assume that waste management contractorsmust pay the levy to government. Recently, the landfill levy has been criticised on two grounds: 1] It gets passed on by wastemanagement contractors to local government, who then need to charge higher rates to thehouseholds and businesses in their region; and 2] It is not achieving its objective of reducingthe amount of waste disposed of in landfill (Clay Lucas and Benjamin Preiss, 'Council callsfor garbage tax refund', The Age, 14 August 2019, p.3; Benjamin Preiss, 'Please to freeze thecatastrophic landfill levy', The Age, 4 April 2020, p.17).(b) Repeat the analysis of the impact of the levy on the market outcome with the assumptionthat demand for disposal of garbage via landfill is own-price inelastic. Does your analysisimply that the criticisms of the landfill levy are valid?

Given information Garbage collection and dispose off creates some negative externality in an…

Local government in Victoria has responsibility for garbage collection from households and business in its region. Local governments contract with waste management suppliers to collect and dispose of their garbage. Contractors must pay to the Victorian state government a levy of $65.90 for each tonne of garbage disposed of as landfill. Assume that the market for disposing of garbage as landfill is perfectly competitive. (a) Use the demand/supply model to show how the levy on disposing of garbage in landfill affects the market outcome. Assume that waste management contractors must pay the levy to government.

Local government in Victoria has responsibility for garbage collection from households and business in its region. Local governments contract with waste management suppliers to collect and dispose of their garbage. Contractors must pay to the Victorian state government a levy of $65.90 for each tonne of garbage disposed of as landfill. Assume that the market for disposing of garbage as landfill is perfectly competitive. (a) Use the demand/supply model to show how the levy on disposing of garbage in landfill affects the market outcome. Assume that waste management contractors must pay the levy to government.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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