Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Chapter 27, Problem 10E
To determine
To explain:
The reason for value of pollution license in one area of a country rises significantly while in another area it remains unchanged and the possible outcomes as a result of this difference.
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Students have asked these similar questions
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?
Why has supply and demand failed to prevent pollution?
The 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…
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- About 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_forwardA developing country implements pollution laws for the first time. Initially, there are some relatively cheap ways to reduce pollution and results are easily evident. After twenty years, they've found that the more one reduces pollution, the higher the marginal benefit. the lower the marginal benefit. the lower the marginal cost.arrow_forwardCompare the emission fee vs. the cap-and-trade system to deal with an externality, in the presence of uncertainty on the marginal cost of pollution reductionarrow_forward
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