The diagrams below show two circumstances involving conventional air pollutants. In each case the marginal damage costs (MDC) and marginal control costs (MCC) are shown as functions of total emissions. You are in charge of designing an emissions control system for the two circumstances. You must choose between an emissions charge system and a permit system. Given the shapes of the curves, which system would you opt for in each situation? Why? (Hint: This question has to do with uncertainty and the sensitivity of costs to small errors).
The diagrams below show two circumstances involving conventional air pollutants. In each case the marginal damage costs (MDC) and marginal control costs (MCC) are shown as functions of total emissions. You are in charge of designing an emissions control system for the two circumstances. You must choose between an emissions charge system and a permit system. Given the shapes of the curves, which system would you opt for in each situation? Why? (Hint: This question has to do with uncertainty and the sensitivity of costs to small errors).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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