One approach to the problem of pollution control in a market economy is to sell pollution credits, which are also known as externality rights. The local pollution-control agency has determined that 200 tons of pollutants may be released without harm to the biological ecosystem into the local lake every year. The city has made 200 pollution credits available every year, where each credit owner is allowed to release 1 ton of pollutants into the lake annually. (a) Draw a correctly labeled graph illustrating the effect of unregulated pollution in the market for paper and identify the following. a. Marginal private cost. b. Marginal external cost. (b) Draw a correctly labeled graph for the pollution credits and use your graph to explain how the pollution credits can address the pollution problem in your city. (c) Evaluate the effectiveness of pollution credits as a means to control pollution. Specifically, consider the following. a. Costs to consumers, producers, and the general public. b. Benefits to consumers, producers, and the general public,
One approach to the problem of pollution control in a market economy is to sell pollution credits, which are also known as externality rights. The local pollution-control agency has determined that 200 tons of pollutants may be released without harm to the biological ecosystem into the local lake every year. The city has made 200 pollution credits available every year, where each credit owner is allowed to release 1 ton of pollutants into the lake annually. (a) Draw a correctly labeled graph illustrating the effect of unregulated pollution in the market for paper and identify the following. a. Marginal private cost. b. Marginal external cost. (b) Draw a correctly labeled graph for the pollution credits and use your graph to explain how the pollution credits can address the pollution problem in your city. (c) Evaluate the effectiveness of pollution credits as a means to control pollution. Specifically, consider the following. a. Costs to consumers, producers, and the general public. b. Benefits to consumers, producers, and the general public,
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please try to write a clear and understandable answer. If the graphs will be done on paper, please try to have clear handwriting that make is possible to understand the labels as well as the way you got to that answer! Thank you!
Transcribed Image Text:One approach to the problem of pollution control in a market economy is to sell pollution credits, which
are also known as externality rights. The local pollution-control agency has determined that 200 tons of
pollutants may be released without harm to the biological ecosystem into the local lake every year. The
city has made 200 pollution credits available every year, where each credit owner is allowed to release 1
ton of pollutants into the lake annually.
3.
(a) Draw a correctly labeled graph illustrating the effect of unregulated pollution in the market for paper
and identify the following.
a. Marginal private cost.
b. Marginal external cost.
(b) Draw a correctly labeled graph for the pollution credits and use your graph to explain how the
pollution credits can address the pollution problem in your city.
(c) Evaluate the effectiveness of pollution credits as a means to control pollution. Specifically, consider
the following.
a.
Costs to consumers, producers, and the general public.
b. Benefits to consumers, producers, and the general public.
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