Suppose the total benefit and total cost to society of various levels of pollution reduction are as follows:
Complete column
Use total net benefit in column
Complete columns
Show that the Principle of Optimization at the Margin also implies that the EPA should require
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Microeconomics (2nd Edition) (Pearson Series in Economics)
- In the diagram, the MC curve slopes upward because Multiple Choice the less pollution society reduces the higher the utility (benefit) of the next unit of pollution reduction. the more pollution society reduces the higher the utility (benefit) of the next unit of pollution reduction. the more pollution society reduces the lower the cost of each additional unit of pollution reduction. the more pollution society reduces the higher the cost of each additional unit of pollution reduction.arrow_forwardUse the model of environmental pollution to model the following changes in a polluting industry to: i) the socially optimal level of pollution; ii) the total abatement costs; and ii) the total damage costs (а) A new technology is invented that allows firms to reducе pollution associated with each level of production output. (b) The government announces a new commitnment to more strictly enforce current environmental regulations. (c) A new study finds the pollutant in question to be more carcinogenic than originally thought.arrow_forwardThe following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. In the stylised model, what is the cost of pollution per high-emission vehicle purchased by buyers equal to?arrow_forward
- Q) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Explain it early. Not solve in excel worksarrow_forwardQ) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Solve it early. Not in excelarrow_forwardQ) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Correctly explain now. Not in excelarrow_forward
- The following table shows how the marginal benefit enjoyed by John, Mary, Loren, and all other consumers of outdoor rock concerts varies with the number made available by a city government per summer. a) What would be the efficient number of concerts to produce if the marginal cost of production were $425 instead of $1,000? b) Suppose the marginal cost of producing rock concerts is only $250 per concert no matter how many are produced. Use the data to calculate the efficient number of concerts. c) If a Lindahl scheme is used to finance the concerts, what prices of admission should be charged to John, Loren, and Mary?arrow_forwardSuppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution (Dollars) (Dollars) (Dollars) Firm X 95 120 200…arrow_forwardSuppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution Firm (Dollars) (Dollars) (Dollars) Firm X 130 165 220 Firm Y 90 115 140 Firm z 600 750 1,200 Now,…arrow_forward
- Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Firm X Firm Y Firm Z Method 1: Regulation Firm Firm X Firm Y Firm Z First Unit of Pollution (Dollars) 130 Now, Imagine that two government employees proposed alternative plans for reducing…arrow_forwardSuppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution (Dollars) (Dollars) (Dollars) Firm X 90 125 180…arrow_forwardSuppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. First Unit of Pollution Cost of Eliminating the... Second Unit of Pollution (Dollars) Third Unit of Pollution (Dollars) Firm (Dollars) Firm X 80 100 150 Firm Y 450 800 1,050 Firm Z 95 120 200 Now,…arrow_forward
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