Microeconomics:
Microeconomics:
4th Edition
ISBN: 9781464143878
Author: Paul Krugman
Publisher: Worth Publishers
Question
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Chapter 16, Problem 3P
To determine

(a)To draw the marginal benefit curves for two plants A and B where Marginal benefit of A is less than plant marginal benefit of B and both emit same level of pollution without government intervention.

(b) Do you expect the total quantity of pollution was more or less than optimal level of pollution before the program was implemented? Explain

(c) If the plants are participant of 33/50 program then mark target level of pollution in 1995 for both? Which was required to emit less and is this solution efficient?

(d) What are the other policies resembling to 33/50 program? what are the shortcomings

Concept:

Marginal benefit: The additional utility that a person receives after consuming additional unit of a good.

Optimal level of pollution: The level at which cost of reducing pollution is less than benefit of reducing pollution

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M” method  Given the following model, solve by the method of “M”. (see image)
As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend.  1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers.  2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.
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