EBK PRINCIPLES OF ECONOMICS
EBK PRINCIPLES OF ECONOMICS
7th Edition
ISBN: 8220102958395
Author: Mankiw
Publisher: CENGAGE L
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Chapter 10, Problem 9PA

Sub part (a):

To determine

The role of tradable pollution permit in efficiency.

Sub part (b):

To determine

The role of tradable pollution permit in efficiency.

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What is an externality in economics? Explain how a neighbor’s barking dog could be both a positive and a negative externality.   Can pollution ever make us better off? How do we know? Should we aim to eliminate all pollution? If not, what should our goal be? Defend your answer.   When thinking about types of goods, what does rivalry mean? What does excludability mean? What are the four categories of goods we can identify using those attributes, and what is an example of a good in each category?
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?
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.
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