Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 14, Problem 1SQP
To determine
To compare
Expert Solution & Answer
Explanation of Solution
When a competitive industry sells pollution generating product, the price of the product will be lower and the quantity produced will be larger than the green industry. Externality cost incurred by the negative externality of the product is not included in the price of the product in the competitive industry. This implies that the price charged is lower than the actual cost and a lower price results in a higher quantity demanded of the product. However, the green industry includes the externality cost for pricing, and hence the price charged will be higher.
Economics Concept Introduction
Externality: Externality is the benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service.
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Chapter 14 Solutions
Economics For Today
Ch. 14.2 - Prob. 1.1GECh. 14.2 - Prob. 1.2GECh. 14.2 - Prob. 1.3GECh. 14.2 - Prob. 2.1GECh. 14.2 - Prob. 2.2GECh. 14.2 - Prob. 2.3GECh. 14.2 - Prob. 2.4GECh. 14 - Prob. 1SQPCh. 14 - Prob. 2SQPCh. 14 - Prob. 3SQP
Ch. 14 - Prob. 4SQPCh. 14 - Prob. 5SQPCh. 14 - Prob. 6SQPCh. 14 - Prob. 7SQPCh. 14 - Prob. 8SQPCh. 14 - Prob. 9SQPCh. 14 - Prob. 10SQPCh. 14 - Prob. 11SQPCh. 14 - Prob. 12SQPCh. 14 - Prob. 13SQPCh. 14 - Prob. 14SQPCh. 14 - Prob. 15SQPCh. 14 - Prob. 16SQPCh. 14 - Prob. 1SQCh. 14 - Prob. 2SQCh. 14 - From an economic viewpoint, the optimal amount of...Ch. 14 - Prob. 4SQCh. 14 - Prob. 5SQCh. 14 - Prob. 6SQCh. 14 - Prob. 7SQCh. 14 - Prob. 8SQCh. 14 - Prob. 9SQCh. 14 - Prob. 10SQCh. 14 - Prob. 11SQCh. 14 - Prob. 12SQCh. 14 - Prob. 13SQCh. 14 - Prob. 14SQCh. 14 - Prob. 15SQCh. 14 - Prob. 16SQCh. 14 - Prob. 17SQCh. 14 - Prob. 18SQCh. 14 - Prob. 19SQCh. 14 - Prob. 20SQ
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- Is zero pollution possible under a marketable permits system? Why or why not?arrow_forwardCalifornia once proposed legislation that would have required 10 percent of its car fleet to be nearly emissions-free by the year 2003. This mandate spurred electric vehicle research. Such vehicles could be powered by photovoltaic cells or by batteries that are recharged using an electrical outlet. Would you agree that it is correct to conclude that electric vehicles that use electrical outlets are emissions-free? What about electric vehicles powered by photovoltaic cells?arrow_forwardEconomists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.arrow_forward
- 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?arrow_forwardWhen studying pollution and the environment, economists A) emphasize costs and benefits. B) attempt to reduce pollution at all costs. C) think pollution is good if it occurs when production takes place. D) have no role to play. E) concentrate on the physical aspects of the environment.arrow_forwardAbout five decades ago, when The Environment Protection Agency was created about, it decided to address pollution through command-and-control laws. These laws, draws distinctions between the needs of firms and costly equipment upgrades. were necessary as US industries had zero incentive to control pollution. were an inexpensive incentive for industrial polluters to improve performance. are given considerable credit for cleaner air and water in recent decades.arrow_forward
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- The table below shows the supply and demand conditions for a furniture factory that pollutes the air. The third column (Qs1) represents a supply curve without accounting for the social cost of pollution. The fourth column (Qs2) represents the supply curve when the firm is required to account for the social cost of pollution. Price QD Qs1 Qs2 $10 450 400 250 $15 440 440 290 $25 430 480 330 $30 420 520 370 $35 410 560 410 Answer the following: a) What is the negative externality in this situation? b) Identify the equilibrium price and equilibrium quantity when we account only for private costs. c) Identify the equilibrium price and equilibrium quantity when we account for the social costs. d) How does accounting for the externality affect the equilibrium price and quantity? JUSTIFY your answer!arrow_forwardThe table below shows the demand for pollution permits to emit hydrocarbons in a particular industrial park. Each permit allows the owner to release one tonne of pollutants into the atmosphere. Price per Pollution Permit Quantity of Permits $4,500 100 4,000 200 3,500 300 3,000 400 2,500 500 2,000 600 1,500 700 were charged, how many tonnes of pollutants would be discharged into the atmosphere, assuming a straight-line a. If fee for a pollution perm demand curve? Quantity: tonnes b. Suppose government were to set a fee of $2,500 per pollution permit. How many tonnes of pollutants would now be dumped? What is the total revenue received by government? Quantity: tonnes Total revenue: $ c. Suppose that a new technology allows for a significant reduction in hydrocarbons at a relatively low cost so that the demand for pollution permits in the industrial park drops by 200 tonnes. Assuming that government holds the permit fee at $2,500, how many tonnes of pollutants would now be dumped? What…arrow_forwardHow can external effects change supply and demand in electricity generation (Please provide a drawing)arrow_forward
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