Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 10, Problem 4PA
Sub part (a):
To determine
The methods and cost of reducing pollution.
Sub part (b):
To determine
The methods and cost of reducing pollution.
Sub part (c):
To determine
The methods and cost of reducing pollution.
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b. If firms' abatement costs fall, how, if at all, does this affect the amount of pollution that
firms will emit if there is a limit on pollution?
If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set
A.
equal to the marginal external cost at the economically efficient level of pollution.
B.
equal to the marginal private cost of production at the economically efficient level of pollution.
C.
equal to the amount of the deadweight loss created in the absence of a pollution tax.
D.
at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product.
What are pollution havens? How are they
created or why do they exist? Why do
economists think they may change over time
and develop policies to reduce pollution?
Chapter 10 Solutions
Essentials of Economics (MindTap Course List)
Ch. 10.1 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.3 - Prob. 3QQCh. 10 - Prob. 1CQQCh. 10 - Prob. 2CQQCh. 10 - Prob. 3CQQCh. 10 - Prob. 4CQQCh. 10 - Prob. 5CQQCh. 10 - Prob. 6CQQCh. 10 - Prob. 1QR
Ch. 10 - Prob. 2QRCh. 10 - Prob. 3QRCh. 10 - Prob. 4QRCh. 10 - Prob. 5QRCh. 10 - Prob. 6QRCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Greater consumption of alcohol leads to more motor...Ch. 10 - Prob. 4PACh. 10 - The many identical residents of Whoville love...Ch. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PA
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- Economists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.arrow_forwardDraw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.arrow_forwardImagine the government of California has proposed a new tax on vehicles based on the amount of emissions they produce in a year. In 2019, there will be 20 tons of emissions produced. The governor’s office has run the calculations and found that the socially optimal level is 14 tons and the marginal damage from each unit of pollution is $150. Imagine there are two types of drivers in California: commuters and non-commuters. Imagine that the marginal cost of reducing pollution for commuters is MCA_C=150Q and the marginal cost of reducing pollution for non-commuters is MCA_N=30Q. Each type initially created ten tons of pollution each. Their total cost of reductions is equal to TCA_C=75Q^2 and TCA_N=15Q^2. How much would each type choose to reduce under the tax? Imagine the governor instead suggested forcing all drivers to reduce their emissions by 30% from their 2019 levels. How would the costs of reduction here compare to the taxation case (please provide actual numbers)? Do you…arrow_forward
- Which of the following describes the effect of an optimal tax on pollution?Select one:a. a benevolent social planner is able to maximize productionb. producers choose not to produce any pollutionc. the value to consumers at market equilibrium exceeds the cost of production (including tax)d. producers internalize the cost of the pollutionarrow_forwardIt’s common to think that reducing pollution is necessarily costly because to reduce pollution we need to tax firms who will then produce less. But can you think of one example in which pollution might not only be unpleasant but might actually reduce production?arrow_forwardThere are three identical firms in Happy Valley. Firms Initial Pollution Level Cost of Reducing Pollution by 1 unit A 30 units $20 B 40 units $30 C 20 units $10 The government wants to reduce total pollution to 60 units, so it gives each firm 20 tradable permits. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so? What is the total cost of pollution reduction in this situation? How much larger would the cost of pollution reduction be if the permits could not be traded?arrow_forward
- Which of the following best explains why economists believe that there is an optimal amount of pollution reduction? The marginal cost of reducing pollution is decreasing, while the marginal benefit of reducing pollution is increasing. Economists only think about profits The marginal cost of reducing pollution is increasing, while the marginal benefit of reducing pollution is decreasing. Economists focus on the benefits of reducing pollution and ignore the cost.arrow_forwardHow do economists determine the optimal amount of pollution control?arrow_forwardDefine pollution charge and will our economy be able to control pollution? Share your thoughts in a paragraph.arrow_forward
- In a competitive market for tradable pollution permits, the quantity of permits (for a given amount of pollution) is set by ________, and the equilibrium price is determined by ________. a. government policy; government policy b. market forces; government policy c. government policy; the average cost of pollution abatement d. government policy; market forcesarrow_forwardThe Coase Theorem says that if people negotiate the right perform activities that cause externalities, they can always arrive at efficient solutions to problems caused by externalities. Use an example to explain why the people that are harmed are willing to pay to stop pollution.arrow_forwardThe table below shows the marginal cost for three firms to clean up units of pollution. Marginal Cost ($) to clean... Firm 1 ton of pollution 2 tons of pollution 3 tons of pollution US Steel 155 580 860 Ford 220 865 1280 Apple 1200 1600 1915 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 $1400. Net Cost for US Steel = $ Net Cost for Ford = $ Net Cost for Apple = $ Societal cost to clean = $ F12arrow_forward
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