To model the effects of a carbon tax on CO2 emissions, policymakersstudy the marginal cost of abatement B(x), defined as the cost of increas-ing CO2 reduction from x to x +1 tons (in units of ten thousand tons-Figure 4). Which quantity is represented by the area under the curve over[0, 3] in Figure 4?B(x) ($/ton)1007550+25-13Tons reduced (ten thousands)FIGURE 4 Marginal cost of abatement B(x).

The abatement cost refers to investments that minimise direct pressures on natural assets (for…

Answered: To model the effects of a carbon tax on…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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When the aggregate marginal savings function is uncertain and the marginal damagecurve is relatively flat, is it optimal to use an emission limit system (cap and trade) or totax emissions to regulate pollution?
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16.)The demand curve for electrical output of a coal generating power plant is Pº 17000 – QD. 1 The supply curve for the plant's electrical output is given by PS 8000 +QS. Sulfur dioxide 2 emissions from the coal plant impose an external cost equal to $3000 per gigawatt-hour of electricity generated on local residents. What is the marginal benefit of society (MBS) curve for this market? e.) MBS = 17000 – Q f.) MBS = 20000 1 g.) MBS = 8000 +Q 2 1 h.) MBS = 11000 + ÷Q 2 17.)The demand curve for electrical output of a coal generating power plant is PD 17000 – QD. = 1 The supply curve for the plant's electrical output is given by PS = 8000 +Q$. Sulfur dioxide emissions from the coal plant impose an external cost equal to $3000 per gigawatt-hour of electricity generated on local residents. What is the marginal cost of society (MCS) curve for this market? e.) MCS = 17000 – Q f.) MCS = 20000 – Q g.) MCS = 1 8000 +Q 2 1 h.) MCS = 11000 +. 2 18.)Which of the following is TRUE in a market that…
Imagine a firm with a marginal abatement cost (MAC) function equal to: MAC = 32 - 4E. The government offers a $8 per-unit subsidy for abatement. In principle, the firm could ignore the subsidy and continue to emit as many emissions as it was in the absence of government intervention, but there is money to be made from cutting back its emissions. Compared to ignoring the subsidy, how much money could a cost-minimizing firm save or make by cutting back its emissions? (Hint: remember that firms trade off the benefits of the subsidy with the costs of abatement when deciding how much to abate) Answer:
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Suppose MAC functions for two firms, Firm 1 and Firm 2, are MAC₁= 60-2E₁and MAC₂-48-3E2 respectively. (i) Suggest the (socially) cost-effective way to set emission standards for the two firms to reduce their combined level of emissions to 20 units. [Note that we want only 20 units of emissions from the two firms at the end.] (ii) What is the sum of the abatement costs (or total social compliance costs) when emissions are reduced from the two firms to 20 units in the socially cost-effective manner by using emission standards. [This is related to part (i).] (iii) What emission tax rate applied simulataneously to the two firms reduces the combined level of emissions to 20 units from the two firms just as the cost-effective way to set standards? [This question needs to answered based on your answer(s) to part (ii).]
Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC1 = 10 - 2E1 MAC2 = 4 - E2 If both firms cut their emissions to zero, then total abatement costs (TAC) for both firms is ____. THE ANSWER IS NOT 17
Update the graph below to illustrate the efficient level of emissions if new research demonstrates that emissions are more harmful than previously estimated. Clearly show which curve(s) change and denote the new efficient level of emissions as E4.
6. Consider the allocation of surface water between two types of users. The marginal net benefits are MNB, (q) =12-q, for one type and MNB, (q₂)=6-q, for the other type, where g, and q denote the quantity of water used by each type in suitable units and MNB denotes marginal net benefits in dollars per unit. a. Determine the aggregate marginal net benefit. b. Suppose there are q, 8 units of water available in a given year. Determine the efficient allocation of water to the two types. c. Suppose there are q, 4 units of water available in a given year. Determine the efficient allocation of water to the two types. d. Draw a clearly labeled graph illustrating the efficient allocation of water in parts b and c.
Suppose we are interested in reducing the carbon footprint associated with heating/cooling buildings oncampus. The functions below describe marginal costs ofCO2abatement (expressed as a function of pollution)for two buildings on the Hendrix College campus. These are hypothetical but are influenced by buildingcharacteristics like age, size, and types of usage. (This information is used for questions 1-4) MCMills = 100−10xM MCSLTC = 75−2.5xS 1. If the College pursued its abatement target by directing each building manager to cut emissions in halffor their respective building, what is the total cost of abatement? 2. If the abatement were pursued with an on-campus carbon tax of$30, would there be the same level ofabatement? Show your work and/or explain. 3. If the goal of the college is to meet the abatement target from question 1, what is the appropriate taxrate? 4. If the appropriate tax rate is used (answer from Q3), how much money can be saved compared to thecommand & control…
The Filthy Chemical Company dumps 100 tons of pollutants every year in the Pristine Lake. The Trout Fishing Co., the only other user of the lake,estimates that if Q tons of pollution were cleaned up every year its profits would rise according to the relation Filthy estimates it can clean the pollutants at constant average costs of $2 per ton. (a) In the interest of efficiency, how much pollution should be cleaned up every year? (b) Suppose Filthy bought Trout. How much would it clean up? What if Trout bought Filthy?
1. The graph below illustrates the marginal abatement cost curve for a firm's carbon dioxide emissions. T° MAC A B E E₁ Carbon Dioxide Suppose that the EPA imposes an emissions tax with a per-unit charge of T* on carbon dioxide emissions. Which of the following statements are true? (Check each that is true) The tax bill to the firm will be given by the area A + B. The firm will choose to reduce emissions by (Eo - E*) units. Total abatement costs to the firm are equal to T*. Total abatement costs plus the tax bill to the firm is given by the area B + C. The firm will prefer a performance standard of E* units over this emissions tax policy.

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