Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 16, Problem 1.2P
To determine
The effect of carbon tax on the electricity users of the two regions.
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One million plastic bottles being sold every minute is a pretty stark number showing why this is a problem, particularly when you add it to the fact that less than half are collected for recycling. Plastic has many desirable properties making it a ubiquitous material. Plastics create millions of products and on top of that millions of jobs. The plastic industry is a huge part of the world economy yet its efficiency and negative externalities are often overlooked.
You are a student of economics and you were recentlyasked to make a virtual presentation at a conference based on the article ‘Drink Bottles’.
REQUIED:
1. ‘Drink Bottles’ presents a case of market failure. Explain what is meant by market failure. Be sure to outline the sources of market failure.
Germany is trying to lower its CO2 emissions by phasing out coal-based electricity production through the forced closure of coal power plants. Why is this policy, even if it is successful in lowering Germany’s CO2 emissions, unlikely to result in lower emissions at the European scale?a) this policy does nothing to address the emissions from the transportation sector, which far outweigh those of coalb) CO2 produced in Germany stays in Germany, and thus has no bearing on the European scalec) Germany has already made substantial reductions to its CO2 output, so that it is a small player on the European scaled) Germany is a member of the European Emissions Trading System (ETS), which sets a binding cap on greenhouse gas emissionse) coal power production in Germany has become extremely efficient, so that its CO2 footprint is insubstantial
Within the remote nation of New Hope, total industrial production is currently creating a constant level of GDP that results in 2,600
million tonnes per year of carbon being released into the atmosphere. The government announced three years ago that a cap on
carbon emissions of 2,430 million tonnes would be imposed. This triggered the creation of new firms that began to plant large
plantations of trees grown specifically to absorb carbon from the atmosphere and thus earn carbon credits that they would sell to the
highest bidder. See table below for the supply of these earned carbon credits available when the program begins.
Quantity of
Credits
Price of
Carbon
Credits
Created
$ 1,125
40
1,225
70
1,325
100
1,425
140
1,525
170
1,625
200
1,725
230
a. What will be the initial price for carbon credits?
Initial price $
Next, assume that new technology enables the same level of GDP to be achieved with 5 percent less carbon emissions.
b. Now what is the price of carbon credits?
Price $
Chapter 16 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
Ch. 16 - Prob. 1.1PCh. 16 - Prob. 1.2PCh. 16 - Prob. 1.3PCh. 16 - A paper factory dumps polluting chemicals into the...Ch. 16 - Prob. 1.6PCh. 16 - [Related to the Economics in Practice on p. 329]...Ch. 16 - Prob. 1.8PCh. 16 - Prob. 1.9PCh. 16 - Two firms, Vesuvius and Etna, are each emitting 9...Ch. 16 - Prob. 1.11P
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