EBK PRINCIPLES OF MICROECONOMICS
7th Edition
ISBN: 8220101472380
Author: Mankiw
Publisher: CENGAGE L
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Chapter 12, Problem 2PA
Subpart (a):
To determine
Total revenue and its composition.
Subpart (b):
To determine
Total revenue and its composition.
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Just Part D please, this is for environmental economics
3. Consider a single firm that manufactures chemicals and generates pollution through its emissions E.
Researchers have estimated the MDF and MAC curves for the emissions to be the following:
MDF = 4E and MAC = 125 – E
Policymakers have decided to implement an emissions tax to control pollution. They are aware that a
constant per-unit tax of $100 is an efficient policy. Yet they are also aware that this policy is not politically
feasible because of the large tax burden it places on the firm. As a result, policymakers propose a two-
part tax:
a per unit tax of $75 for the first 15 units of emissions
an increase in the per unit tax to $100 for all further units of emissions
With an emissions tax, what is the general condition that determines how much pollution the regulated
party will emit?
What is the efficient level of emissions given the above MDF and MAC curves?
What are the firm's total tax payments under the constant $100 per-unit tax?
What is the firm's total cost of compliance…
2. Answer the following questions as they relate to a fishery:
Why is the maximum sustainable yield not necessarily the optimal sustainable yield? Does the same
intuition apply to Nathaniel's decision of when to cut his trees?
What condition will hold at the equilibrium level of fishing in an open-access fishery? Use a graph to
explain your answer, and show the level of fishing effort.
Would this same condition hold if there was only one boat in the fishery? If not, what condition will
hold, and why is it different? Use the same graph to show the single boat's level of effort.
Suppose you are given authority to solve the open-access problem in the fishery. What is the key
problem that you must address with your policy?
Chapter 12 Solutions
EBK PRINCIPLES OF MICROECONOMICS
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