Marginal benefit, to individual producer $1,100 MB 1,000 900 800 700 600 MBA 500 400 300 200 100 0 200 600 1,000 1,400 1,800 2,200 Quantity of pollution emisions (tons) 7. Carbon Dioxide Pollution in Duopoly. Currently each firm is emitting 2,000 tons of carbon dioxide, so the total emissions is 4,000 tons. The government wishes to limit total emissions to 1,600 tons in the market. a. (16) The government decides to impose environmental standards so that each firm will be allowed to emit 800 tons each. What will be the total cost in this Duopoly if the government does this? b. {16} Instead of imposing environmental standards, the government passes an emissions tax of $400 per ton. How much carbon dioxide will each firm emit in this case and what will be the total cost in this Duopoly with the emissions tax?

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 38CTQ: How can high-income countries benefit from covering much of the cost of reducing pollution created...
Question
Marginal benefit,
to individual
producer
$1,100
MB
1,000
900
800
700
600
MBA
500
400
300
200
100
0 200
600 1,000 1,400 1,800 2,200
Quantity of pollution emisions (tons)
7. Carbon Dioxide Pollution in Duopoly. Currently each firm is emitting 2,000 tons of carbon dioxide, so the total
emissions is 4,000 tons. The government wishes to limit total emissions to 1,600 tons in the market.
a. (16) The government decides to impose environmental standards so that each firm will be allowed to emit 800 tons
each. What will be the total cost in this Duopoly if the government does this?
b. {16} Instead of imposing environmental standards, the government passes an emissions tax of $400 per ton. How
much carbon dioxide will each firm emit in this case and what will be the total cost in this Duopoly with the emissions
tax?
Transcribed Image Text:Marginal benefit, to individual producer $1,100 MB 1,000 900 800 700 600 MBA 500 400 300 200 100 0 200 600 1,000 1,400 1,800 2,200 Quantity of pollution emisions (tons) 7. Carbon Dioxide Pollution in Duopoly. Currently each firm is emitting 2,000 tons of carbon dioxide, so the total emissions is 4,000 tons. The government wishes to limit total emissions to 1,600 tons in the market. a. (16) The government decides to impose environmental standards so that each firm will be allowed to emit 800 tons each. What will be the total cost in this Duopoly if the government does this? b. {16} Instead of imposing environmental standards, the government passes an emissions tax of $400 per ton. How much carbon dioxide will each firm emit in this case and what will be the total cost in this Duopoly with the emissions tax?
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