Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 30, Problem 3WNG
To determine
Prove that, by selling and buying pollution permit can reduce half ton pollution.
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Students have asked these similar questions
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…
The primary source of air pollution in the small town of Smokey, Nevada is a nearby steel mill. The local environmental agency has decided that the mill needs to reduce its emissions because the town's
population is located directly downwind from it. Currently the agency is considering three different approaches to reducing pollution from the mill: a technology standard, an emission standard and an
emission tax.
Why might the owner of the mill prefer an emission standard to a technology standard that would produce the same level of emissions?
a
Because with emission standards the polluter is more flexible in selecting the technology that will minimize her abatement cost
Ob. Because polluters usually try to stick to their existing technology
O C. Because it has been proven to be easier to implement
O d. Because polluters, as all producers are suspicious about new technologies
ЕOC 11.04
Consider two car factories, one run by Ford and the other run by Honda, that both create pollution. The government wants to
reduce how much these two factories pollute by 40 tons, so only allow factories to pollute if they have a permit. Each factory is
given 20 pollution permits. A business can use a permit to emit one ton of pollution or they can sell it to another business (and
lose the ability to pollute). To lower pollution it costs Ford $200 per ton of pollutant removed and it costs Honda $100 per ton
removed. After Ford and Honda have met to trade their permits with each other, what we expect to happen?
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
Honda emits 20 tons of pollutants and Ford emits 20 tons of pollutants.
a
Honda no longer pollutes and Ford does not lower how much it produces.
Honda increases its pollution and Ford lowers its pollution.
Ford no longer pollutes and Honda does not lower how much it…
Chapter 30 Solutions
Economics (MindTap Course List)
Ch. 30.1 - Prob. 1STCh. 30.1 - Prob. 2STCh. 30.2 - Prob. 1STCh. 30.2 - Prob. 2STCh. 30.2 - Prob. 3STCh. 30.2 - Prob. 4STCh. 30.3 - Prob. 1STCh. 30.3 - Prob. 2STCh. 30.3 - Prob. 3STCh. 30.4 - Prob. 1ST
Ch. 30.4 - Prob. 2STCh. 30.4 - Prob. 3STCh. 30.5 - Prob. 1STCh. 30.5 - Prob. 2STCh. 30.5 - Prob. 3STCh. 30 - Prob. 1QPCh. 30 - Prob. 2QPCh. 30 - Prob. 3QPCh. 30 - Prob. 4QPCh. 30 - Prob. 5QPCh. 30 - Prob. 6QPCh. 30 - Prob. 7QPCh. 30 - Prob. 8QPCh. 30 - Prob. 9QPCh. 30 - Prob. 10QPCh. 30 - Prob. 11QPCh. 30 - Prob. 12QPCh. 30 - Economists sometimes shock noneconomists by...Ch. 30 - Prob. 14QPCh. 30 - Prob. 15QPCh. 30 - Prob. 1WNGCh. 30 - Prob. 2WNGCh. 30 - Prob. 3WNG
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Similar questions
- Economists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.arrow_forwardIs zero pollution possible under a marketable permits system? Why or why not?arrow_forwardDraw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.arrow_forward
- Production of Commodity X creates 10 pounds of emissions for every unit of X produced. The demand and supply curves for X are described by the following table: What is the equilibrium price and quantity, and how much pollution will be emitted?arrow_forwardIn 300-500 words, describe two examples of positive externalities and two examples of negative externalities in the real world. Pollution doesn't count..arrow_forwardImagine the government of California has proposed a new tax on vehicles based on the amount of emissions they produce in a year. In 2019, there will be 20 tons of emissions produced. The governor’s office has run the calculations and found that the socially optimal level is 14 tons and the marginal damage from each unit of pollution is $150. Imagine there are two types of drivers in California: commuters and non-commuters. Imagine that the marginal cost of reducing pollution for commuters is MCA_C=150Q and the marginal cost of reducing pollution for non-commuters is MCA_N=30Q. Each type initially created ten tons of pollution each. Their total cost of reductions is equal to TCA_C=75Q^2 and TCA_N=15Q^2. How much would each type choose to reduce under the tax? Imagine the governor instead suggested forcing all drivers to reduce their emissions by 30% from their 2019 levels. How would the costs of reduction here compare to the taxation case (please provide actual numbers)? Do you…arrow_forward
- A T, C Pollution The above graph illustrates the marginal pollution cost per ton of goods that a firm produces. Assume the firm currently has no regulation and will produce at the point Qmax. Suppose a pollution tax per ton is placed on the firm (T1). What area represents the tax paid by the firm? C only A+B A+B+Carrow_forwardThe following table shows the marginal costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second unit of pollution it would cost an additional $67. Firm Unit to be eliminated A B C D First unit 54 57 54 62 Second unit 67 68 66 73 Third unit 82 86 82 91 Fourth unit 107 108 107 111 Refer to Table 5. If the government charged a fee of $84 per unit of pollution, how many units of pollution would the firms eliminate altogether?arrow_forwardThere are three identical firms in Happy Valley. Firms Initial Pollution Level Cost of Reducing Pollution by 1 unit A 30 units $20 B 40 units $30 C 20 units $10 The government wants to reduce total pollution to 60 units, so it gives each firm 20 tradable permits. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so? What is the total cost of pollution reduction in this situation? How much larger would the cost of pollution reduction be if the permits could not be traded?arrow_forward
- The table below shows the supply and demand conditions for a furniture factory that pollutes the air. The third column (Qs1) represents a supply curve without accounting for the social cost of pollution. The fourth column (Qs2) represents the supply curve when the firm is required to account for the social cost of pollution. Price QD Qs1 Qs2 $10 450 400 250 $15 440 440 290 $25 430 480 330 $30 420 520 370 $35 410 560 410 Answer the following: a) What is the negative externality in this situation? b) Identify the equilibrium price and equilibrium quantity when we account only for private costs. c) Identify the equilibrium price and equilibrium quantity when we account for the social costs. d) How does accounting for the externality affect the equilibrium price and quantity? JUSTIFY your answer!arrow_forwardShould the goal be to eliminate all pollution? How do firms deal with externalities such as pollution in economic terms? Are there economic arguments in favor of allowing a certain amount of pollution? If so, explain in detail.arrow_forwardThe following companies all manufacture widgets and dump tons of glop into the air. Manufacturer Cost to clean up 1 ton of glop Current contribution to overall pollution (tons of glop) 200 Polluters-R-Us Smog Brothers, Inc. Really Dirty Industries 0 $ 70 100 30 The government wants to halve total pollution but does not know how much it will cost each company. the government employs a tradable permit scheme in which it gives the same number of permits to each manufacturer at no cost, the total cost of cleanup for Smog Brothers, Inc., after the exchange of permits, is $ 7,000 6,000 13,000 200 200arrow_forward
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