The graph above represents a bilateral transboundary pollutant and the economics of reaching an agreement between two countries, Country A and Country B. MD; represents total damages of A and B. Answer the following discussion questions: 1. Question 1: How could one interpret the amount calculated by (MD: -MD,)? 2. Question 2: In your opinion, what point would Country A regard as efficient level of emissions without regard to the externalities it produces in Country B? Explain your answer.

The graph above represents a bilateral transboundary pollutant and the economics of reaching an agreement between two countries, Country A and Country B. MD; represents total damages of A and B. Answer the following discussion questions: 1. Question 1: How could one interpret the amount calculated by (MD: -MD,)? 2. Question 2: In your opinion, what point would Country A regard as efficient level of emissions without regard to the externalities it produces in Country B? Explain your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

3) The supply and demand of sugar are given as Q. = 5P, Q = 250- P where Q, is tons supplied per year, P is the price per ton; Qa is tons demanded per year. Because of the pollution associated with production, marginal external costs of 40 are associated with each ton of sugar. Assuming that sugar is sold in a competitive market, a) What is the market price? How many tons of paper will be produced per year at that price? b) What is the efficient output of paper? c) What is the amount of total Pigouvian tax to achieve efficiency? d) What is the amount of total Pigouvian subsidy to achieve efficiency?
Consider a manufactured good whose production process generates pollution. The demand for the product is Q=100-3P. The market supply function is Q=P. The marginal external cost is MEC=2Q. What is the emissions tax that needs to be imposed to achieve the social optimum? Illustrate on graph What is the economic incidence of this emissions tax? In other words, what proportion of this tax will be paid by producers of this product and what proportion of the tax will be paid by consumers?
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Suppose there are only two polluting firms, called A and B, with the following marginal abatement costs: 1602AA MACe=− and 100BB MACe=−, where A e represents firm A’s emissions in tons and B e represents firm B’s emissions in tons. Suppose the government wishes to ensure that the two firms together emit 60 tons of the pollutant and uses a Tradable Emission Permit (TEP) policy. Assume that each TEP allows its holder to emit 1 ton, and that the market for permits is perfectly competitive. a. Suppose the government initially distributes the total number of TEPs it issues equally between the two firms. The permits are distributed free of charge. Once trade in permits takes place, what will be the equilibrium in the market for TEPs (i.e. which firm will buy how many TEPs from the other, and at what price)? b. Briefly describe three problems of setting up a TEP market.
Explain why, in the absence of governmental environmental regulation, competitive markets overproduce goods whose production involves the creation of negative externalities. Provide an example of a good that generates a negative externality.
2
MAC_1 = 11 - 2E 1 MAC 2 = 8.5 E_2, and assume marginal external damages ( MED) from the aggregate emissions of both firms (E_Agg E_1 + E_2) is: MED = .5 E_Agg. To achieve the socially efficient level of aggregate emissions (E*_Agg), the government institutes a per- unit tax on emissions. With this tax, the total amount of tax revenue raised is $ =
Suppose there are only two polluting firms, called A and B, with the following marginal abatement costs: MACA=160 2- e and MACB=100-es, where e represents firm A's emissions in tons and ea represents firm B's emissions in tons. Suppose the government wishes to ensure that the two firms together emit 60 tons of the pollutant and uses a Tradable Emission Permit (TEP) policy. Assume that each TEP allows its holder to emit 1 ton, and that the market for permits is perfectly competitive. a. Suppose the government initially distributes the total number of TEPs it issues equally between the two firms. The permits are distributed free of charge. Once trade in permits takes place, what will be the equilibrium in the market for TEPS (i.e. which firm will buy how many TEPs from the other, and at what price)? b. Briefly describe three problems of setting up a TEP market.
The figure above shows the marginal social cost and marginal social benefit curves for a chemical producing firm operating upstream from a hatchery. If the government imposes a $40 tax per ton of emissions, which of the following is true? MSC, MSB ($/ton) 100 MSC 90 80A 70 60 50 40 30 20 MSB 10 B. 1. 4. 10 Quantity of Emissions (tons per day)