Under what circumstances might an equal allocation of abatement responsibility across all firms in an industry do a pretty good job of achieving a desired overall level of abatement at the lowest overall cost, without the need to resort to market-based methods such as pollution taxes or cap-and-trade?
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Under what circumstances might an equal allocation of abatement responsibility across all firms in an industry do a pretty good job of achieving a desired overall level of abatement at the lowest overall cost, without the need to resort to market-based methods such as pollution taxes or cap-and-trade?
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- Lecture: Externality - Pigou8. All-Leather is a tanning company located on Lake Michigan in Chicago. Its total cost functionis C(QA) = 125 + 8QA + 5QA2, where QA is leather production per week in thousands of pounds.a) If leather sells for $408 per thousand pounds, how much leather will All-Leather produce?How much profit does All-leather earn?Enjoy is a beverage company located on Lake Michigan near All-Leather in Chicago. Enjoy’sproduction of beverages is negatively affected by water pollution from All-Leather’s productionof leather. Enjoy’s total cost function to produce beverages isC(QE) = 10QE +3QE2 + 3QA2where QE is Enjoy’s weekly production of beverages, in thousandsof gallons and, as above, QA is All-Leather’s weekly production of leather.b) Is this an example of a pecuniary externality or a real externality? Explain.c) What is the extra cost to Enjoy from an additional thousand tons of leather production by AllLeather (i.e., the external marginal cost of an extra unit of QA…pik Schiel 0 ( QR Q2 MC2 FIRMI permits метро Firma shing p* > MC₂ will abate QA sell. Wilfrid I permetWhich of the following policies aimed at reducing sulfur pollution would create an incentive for firms to find new innovative ways to reduce sulfur emissions? (Select all that apply) A requirement that all firms use a scrubber that removes sulfur from the smoke stack Marketable permits for sulfur emissions A sulfur pollution charge A requirement that all firms use a certain type of fuel
- If an up-scale jewelry maker sells its products to retailers with the explicit condition that the retailers may not resell the products below a specified price, this is an example of ________.A number of reasons have been put forward for the perceived failure of small firms to become environmentally aware: Cost Lack of expertise Ignorance of legislation Scale advantages. a) explain each reason that led to failure of small firms to become environmentally aware. b) What may these factors have led to?What is necessary to do in order to create greater interest within the small-firm sector and improve its environmental practices?The owner of an independent full-service lodging property has reviewed your proposal for the installation of a property management system. The proposal is thorough; it includes all the necessary steps outlined in this chapter. However, the owner says that due to economic conditions at this time, we have to cut back and purchase only five of the eleven modules in the proposal. Which of the five modules would you maintain? Justify your decision. a. Reservations b. Revenue Management c. Registration d. Room Status e. Posting f. Call Accounting g. Back Office h. Housekeeping i. Food and Beverage j. Marketing and Sales k. Night Audit *Write in at least 1000 count of words.*
- Question #2. Assume that an administered water district faces a marginal benefit curve for water represented by the linear function P= MB = -0.5Q + 1200 where Q is the quantity of water in acre-feet. Assume the district’s total cost function is Q2 + 200Q. What is the economically efficient level and price of water use? What would be the revenue of the district under a marginal cost pricing scheme? What would be the revenue of the district under an average cost pricing scheme? What would be the total cost of water under the average cost pricing scheme? Given your answers to 5a through 5d—what is the profit or loss of the water district under each pricing scheme? Why would a water district choose to price water based on average costs? What is consumer surplus under each pricing scheme? What is producer surplus under each pricing scheme? Describe two other water pricing approaches and their potential impact on water consumption. In a brief essay explain the difference between…Consider the following graph depicting the industry aggregate marginal abatement costs. The government is considering introducing an emission trading scheme where 140 domestic emission permits would be made available and allocated using an ascending uniform price auction. While the domestic auction takes place, international permits are also available at the price of $40 per permit. Firms can purchase international permits. The price of international permits is known to the firms. Choose the correct answers to the questions from the lists of available answers. Marginal Abatement Cost - Industry Costs 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 0 20 40 60 80 100 120 140 160 180 200 220 240 What would be the price at the auction? What would be the government's revenue from the auction? What would be the total abatement cost (TAC) for the industry? What would be the total compliance costs (TCC) for the industry? ✔ [ Choose ] 60 860 10000 600 400 40 9000 2800 1800 9800 8600 65…Attached is the marginal abatement costs of three firms, related to the quantity of emissions. Each firm is now emitting 10 tons per week, so total emissions are 30 tons per week. Suppose we wish to reduce emissions by 50 percent, to 15 tons per week. Compare the total cost of doing this: (a) with an equi-proportionate decrease in emissions (b) with a decrease that meets the equi-marginal principle.
- The Swedish Environmental Protection Agency investigates how emissions of an environmentally hazardous substance from an industrial sector should be regulated, either through a tax on the emissions or through a quantitative regulation (limit value). As this is a new substance (new substance), knowledge of the level of environmental damage and the costs of reducing emissions is uncertain. In more technical terms: the regulatory authorities do not have complete information on the positions on either the dD / dM curve (marginal damages) or the MAC curve (marginal abatement costs). a) Explain and show graphically whether - and if so how - the uncertainty about the position of the MAC curve affects the choice between regulating emissions with a tax or limit value from a socio-economic efficiency perspective. b) Explain and show graphically whether - and if so how - the uncertainty about the position of the dD / dM curve affects the choice between regulating emissions with a tax or limit…Suppose that under the United States-Canada Air Quality Agreement, both countries agree to a combined 30 percent SO2 abatement standard. Further assume that the following SO2 abatement cost functions have been estimated by each country: TACUS = 500 + 1.5(AUS)2 MACUS = 3 AUS TACCAN = 1000 + 3(ACAN)2 MACCAN = 6 ACAN A. If the countries implement a uniform abatement standard, find the resulting values of TAC and MAC for each nation. Based on these values, is there an economic incentive the two nations to participate in an emissions trading program? Explain. B. Assuming a trading program is enacted, find the cost savings associated with a cost-effective abatement solution? C. What must be the price of a tradeable permit to achieve the cost-effective abatement allocation?Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake? Please provide the correct answer. Thank you!
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