Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 90 81 72 63 54 45 36 27 18 9 0 Demand 0 60 120 180 240 300 360 420 480 540 600 QUANTITY (Millions of tons) Graph Input Tool Daily Demand for Pollution Rights Price (Dollars per ton) Quantity Demanded (Millions of tons) 9 540 Suppose the government has determined that the socially optimal quantity of radioactive waste is 360 million tons per day. One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. A tax (or price in this case) of $ of radioactive waste emitted will achieve the desired level of pollution. (? per ton Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of radioactive waste per day. To achieve the socially optimal quantity of pollution, the government auctions off 360 million pollution permits. Given this quantity of permits, the price for each permit in the market for pollution rights will be $

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 90 81 72 63 54 45 36 27 18 9 0 Demand 0 60 120 180 240 300 360 420 480 540 600 QUANTITY (Millions of tons) Graph Input Tool Daily Demand for Pollution Rights Price (Dollars per ton) Quantity Demanded (Millions of tons) 9 540 Suppose the government has determined that the socially optimal quantity of radioactive waste is 360 million tons per day. One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. A tax (or price in this case) of $ of radioactive waste emitted will achieve the desired level of pollution. (? per ton Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of radioactive waste per day. To achieve the socially optimal quantity of pollution, the government auctions off 360 million pollution permits. Given this quantity of permits, the price for each permit in the market for pollution rights will be $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per ton)
90
81
72
63
54
45
36
18
9
0
Demand
0 60 120 180 240 300 360 420 480 540 600
QUANTITY (Millions of tons)
Graph Input Tool
Daily Demand for Pollution Rights
Price
(Dollars per ton)
Quantity
Demanded
(Millions of tons)
9
540
Suppose the government has determined that the socially optimal quantity of radioactive waste is 360 million tons per day.
One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. A tax (or price in this case) of $
of radioactive waste emitted will achieve the desired level of pollution.
?
per ton
Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the
desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of radioactive waste per
day. To achieve the socially optimal quantity of pollution, the government auctions off 360 million pollution permits. Given this quantity of permits, the
price for each permit in the market for pollution rights will be $

Nuclear facilities emit radioactive waste as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a
negative externality of electricity production. Suppose the U.S. government wants to correct this market failure by getting firms to internalize the cost
of pollution. To do this, the government can charge firms for pollution rights (the right to emit a given quantity of radioactive waste). The following
graph shows the daily demand for pollution rights.

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