(a) To find: The equilibrium quantity and price and its graphical representation.

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Section 1 Answer all questions. Show all your workings. (a) Suppose there are two firms 1 and 2, whose abatement costs are given by c₁(e₁) and c₂ (e₂), where e denotes emissions and subscripts denote the firm. We assume that c{(e;) 0 for i = 1,2 and for any level of emission e we have c₁'(e) # c₂'(e). Furthermore, assume the two firms make different contributions towards pollution concentration in a nearby river captured by the transfer coefficients ε₁ and 2 such that for any level of emission e we have 2(e) +2 The regulator does not know the resulting C₁'(e) Τι environmental damages. Using an analytical approach explain carefully how the regulator may limit the concentration of pollution using (i) a Pigouvian tax scheme and (ii) uniform emissions standards. Discuss the cost-effectiveness of both approaches to control pollution. [200 marks] (b) "Whether the regulator sells or gives away tradeable emission permits free of charge, the quantities of emissions produced by firms are the…

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Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

Chapter 2, Problem 7CACQ

To determine

(a)

To find:

The equilibrium quantity and price and its graphical representation.

To determine

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

To determine

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

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Section 1 Answer all questions. Show all your workings. (a) Suppose there are two firms 1 and 2, whose abatement costs are given by c₁(e₁) and c₂ (e₂), where e denotes emissions and subscripts denote the firm. We assume that c{(e;) 0 for i = 1,2 and for any level of emission e we have c₁'(e) # c₂'(e). Furthermore, assume the two firms make different contributions towards pollution concentration in a nearby river captured by the transfer coefficients ε₁ and 2 such that for any level of emission e we have 2(e) +2 The regulator does not know the resulting C₁'(e) Τι environmental damages. Using an analytical approach explain carefully how the regulator may limit the concentration of pollution using (i) a Pigouvian tax scheme and (ii) uniform emissions standards. Discuss the cost-effectiveness of both approaches to control pollution. [200 marks] (b) "Whether the regulator sells or gives away tradeable emission permits free of charge, the quantities of emissions produced by firms are the…

Exotic Coffee for the Poor? What a Genius Idea! you are a business consultant at a coffee shop. Your team leader came to you one morning with excitement on her face and told you, "Guess what? I have an idea for a great location for our next coffee shop. Think about it, Riceville is a city that has 150,000 people. Most of them are above the age of 16, which means they are potential coffee drinkers. Well, even though the majority of people in that city are making minimum wage and are considered poor, but the good news is that there are no coffee shops in Riceville and the only places you could get coffee there either restaurants or gas stations. What do you think?" Knowing that your company’s average drink price is $5.50, and the stores have nice sit-down areas and offer free WIFI and study spaces: What type of information about consumers in that area do you need to gather and understand to determine if people there will actually consume your coffee? How do the concepts of “budget and…

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Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

Chapter 2, Problem 7CACQ

To determine

(a)

To find:

The equilibrium quantity and price and its graphical representation.

To determine

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

To determine

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

Expert Solution & Answer

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Answer 3

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Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

Chapter 2, Problem 7CACQ

To determine

(a)

To find:

The equilibrium quantity and price and its graphical representation.

To determine

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

To determine

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

Expert Solution & Answer

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Answer 4

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Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

Chapter 2, Problem 7CACQ

To determine

(a)

To find:

The equilibrium quantity and price and its graphical representation.

To determine

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

To determine

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

Expert Solution & Answer

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Answer 5

Chapter 2, Problem 7CACQ

To determine

(a)

To find:

The equilibrium quantity and price and its graphical representation.

To determine

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

To determine

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

Answer 6

Chapter 2, Problem 7CACQ

To determine

(a)

To find:

The equilibrium quantity and price and its graphical representation.

Answer 7

Chapter 2, Problem 7CACQ

To determine

(a)

To find:

The equilibrium quantity and price and its graphical representation.

Answer 8

To determine

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

Answer 9

To determine

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

Answer 10

To determine

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

Answer 11

To determine

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

Answer 12

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Ch. 2 - Prob. 1CACQ Ch. 2 - Prob. 2CACQ Ch. 2 - Prob. 3CACQ Ch. 2 - Prob. 4CACQ Ch. 2 - Prob. 5CACQ Ch. 2 - Prob. 6CACQ Ch. 2 - Prob. 7CACQ Ch. 2 - Prob. 8CACQ Ch. 2 - Prob. 9CACQ Ch. 2 - Prob. 10CACQ

(a) To find: The equilibrium quantity and price and its graphical representation.

Solution Summary: The author explains equilibrium in a market, where quantity demand is equal to quantity supplied. The equilibrium point is determined at E.

Concept explainers

(a)

To find:

The equilibrium quantity and price and its graphical representation.

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.

Chapter 2 Solutions

(a) To find: The equilibrium quantity and price and its graphical representation.

Solution Summary: The author explains equilibrium in a market, where quantity demand is equal to quantity supplied. The equilibrium point is determined at E.

Concept explainers

(a) To find: The equilibrium quantity and price and its graphical representation.

(b) To find: The new equilibrium price and quantity when excise tax of $12 is imposed.

(c) To find: The tax revenue that the government will earn at imposing $12 as tax.

Chapter 2 Solutions

(a)

To find:

The equilibrium quantity and price and its graphical representation.

(b)

To find:

The new equilibrium price and quantity when excise tax of $12 is imposed.

(c)

To find:

The tax revenue that the government will earn at imposing $12 as tax.