The table below shows the marginal cost for three firms to clean up units of pollution. Marginal Cost ($) to clean... 2 tons of pollution 425.00 745.00 1515.00 Firm US Steel Ford Apple Net Cost for US Steel = $ Net Cost for Ford = $ Suppose the government gives every firm enough permits so that, without trade, every firm must clean two units of pollution. What will the cost be to every firm, and the cost to clean 6 units of pollution? The market price for a permit is $1410. Net Cost for Apple = $ 1 ton of pollution 145.00 225.00 1300.00 Societal cost to clean = $ 3 tons of pollution 870.00 1280.00 1975.00

The table below shows the marginal cost for three firms to clean up units of pollution. Marginal Cost ($) to clean... 2 tons of pollution 425.00 745.00 1515.00 Firm US Steel Ford Apple Net Cost for US Steel = $ Net Cost for Ford = $ Suppose the government gives every firm enough permits so that, without trade, every firm must clean two units of pollution. What will the cost be to every firm, and the cost to clean 6 units of pollution? The market price for a permit is $1410. Net Cost for Apple = $ 1 ton of pollution 145.00 225.00 1300.00 Societal cost to clean = $ 3 tons of pollution 870.00 1280.00 1975.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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firms matter for efficiency? Explain. 9. There are three industrial firms in Happy Valley. Initial Pollution Cost of Reducing Firm Level Pollution by 1 Unit A 30 units $20 В 40 units $30 C 20 units $10 The government wants to reduce pollution to 60 units, so it gives each firm 20 tradable pollution permits. a. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation? b. How much higher would the costs of pollution reduction be if the permits could not be traded? Answers
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The figure below shows the marginal benefit (demand) of polluting for two firms: Alpha and Beta. Before the introduction of a pollution tax, pollution is free, that is, MC = $0 per ton of emissions. Marginal Benefit (MB) to Firm Tax = $100 0 MB BETA MBALPHA 25 50 75 100 Emissions (tons) The government decides to impose a tax on pollution of $100 per ton of emissions. That is, the per-unit the tax is the marginal cost of polluting. Which of the follow are true? (Select all that are true.) a. As a result of the tax, the total emissions will decrease by 50 units b. The tax was intended to decrease production by 50 units for each firm. c. As a result of the tax, both firms will decrease emissions by the same amount d. After the tax is imposed, Firm Beta will emit 50 tons more pollution than Firm Alpha e. Before the tax is imposed, Firm Beta emitted more pollution than Firm Alpha f. As a result of the tax, total emissions from the two firms will be cut in half g. The amount of tax collected…
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Consider the following simplified scenario. Imagine that the Australian national rugby union(for short, Rugby AU) has exclusive rights to organize the games played by the national team.Rugby AU decides that the next match, between the Wallabies and the All Blacks (i.e., theAustralian and the New Zeeland national rugby teams), will be hosted at the Marvel Stadiumin Melbourne. Rugby AU has no fixed costs for organizing the game, but it must pay a marginalcost MC of $20 per seat to the owners of the Marvel Stadium. Two types of tickets will be soldfor the game: concession and full fare. Based on any official document that attests to their age,children and pensioners qualify to purchase concession tickets that offer a discounted price;everyone else pays the full fare. The demand for full-fare tickets is QF(P) = 120 – 2P. Thedemand for concession tickets is QC(P) = 80 – 2P. Combined/merged market (M) i) Suppose that Rugby AU becomes unable to verify the age of its customers; thus,…
Suppose the the government has set the trading price of a permit at $126 per permit. Complete the following table with the action each firm will take at this permit price, the amount of pollution each firm will eliminate, and the amount it costs each firm to reduce pollution to the necessary level. If a firm is willing to buy two permits, assume that it buys one permit from each of the other firms. (Hint: Do not include the prices paid for permits in the cost of reducing pollution.) Firm Firm A Firm B Firm C Initial Pollution Permit Allocation (Units of pollution) 2 2 2 Regulation Versus Tradable Permits Action Proposed Method Regulation Tradable Permits Final Amount of Pollution Eliminated (Units of pollution) Cost of Pollution Reduction (Dollars) Determine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might need to get information from previous tasks to complete this table.) Total Cost of Eliminating…
There are two firms, A and B emitting sulfur dioxide. In total, they emit 100 tons of sulfur dioxide. The EPA wants to reduce sulfur dioxide emissions by 60 tons so that the final level of emissions in only 40 tons. The table below shows the emissions and cost of abatement for each firm. If the EPA were to issue 40 tradeable pollution permits, 20 to each firm, where each pollution permit allows 1 ton of emission, what would the final allocation of permits across the two firms be if they traded permits with esch other? sO, Emission Cost per ton of so, reduction Company Firm A 30 tons $1,000 per ton Firm B 70 tons $800 per ton Total Emissions 100 tons Select an answer and submit. For keyboard navigation, use the up/down arow keys to select an answer. a Each firm will have 20 permits. b. Firm A will have all 40 permits. Firm A will have 30 permits and Firm B will have 10 permits. Firm A will have 10 permits and Firm B will have 30 permits.