Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 30.3, Problem 2ST
To determine
Uncertainty in tradable pollution permit and emission tax.
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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.
What is the main rationale behind marketable
pollution permits?
A 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.
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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- Is zero pollution possible under a marketable permits system? Why or why not?arrow_forwardEconomists sometimes shock noneconomists by stating that they do not favor the complete elimination of pollution. Explain the rationale for this position.arrow_forwardShow why we normally won’t want to pay what it would cost to eliminate every last bit of a negative externality such as air pollution.arrow_forward
- Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per ton) 90 81 72 63 54 45 36 27 18 9 0 Demand 0 60 120 180 240 300 360 420 480 540 600 QUANTITY (Millions of tons) Graph Input Tool Daily Demand for Pollution Rights Price (Dollars per ton) Quantity Demanded (Millions of tons) 9 540 Suppose the government has determined that the socially optimal quantity of radioactive waste is 360 million tons per day. One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. A tax (or price in this case) of of radioactive waste emitted will achieve the desired level of pollution. $36 per ton Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of…arrow_forwardWould environmentalists favor command-and-control policies as a way to reduce pollution? Why or why not? Explain.arrow_forwardTradable pollution permits can lower the cost of reducing pollution because Group of answer choices the government standards are lower. the system is easier to setup and control. some firms can reduce pollution at a lower cost than others.arrow_forward
- What are the costs of pollution according to the Lancet Commission on pollution and health? Why are those numbers likely to be an underestimate? Explain.arrow_forwardWhy do external diseconomies existarrow_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
- Despite the logic of the Coase theorem, private actors often fail to resolve the problems caused by negative environmental externalities on their own due to high transaction costs. O True O Falsearrow_forwardWhich of the following would create a negative externality? A person plays loud music that can be heard by neighbors who would like to sleep O People do not consider the risk of spreading a virus when making decisions O A power plant does not pay the cost of acid rain from burning coal all of thesearrow_forwardA system of tradable emissions permits ("cap and trade") ensures that: those who can reduce pollution at least cost will do so pollution will be at the level where marginal social benefit equals zero pollution will be at the level where marginal social cost equals zero there will be no pollutionarrow_forward
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