ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 4, Problem 7RQ
To determine
True or false.
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Assume citizens of Destrahan are complaining that Shell Chemical and Dow Chemical are polluting the environment. Currently, each firm emits 40 tons of pollution per year. Shell Chemical could reduce its pollution at a cost of $500 per ton, and Dow Chemical could reduce its pollution at a cost of $100 per ton. To reduce overall pollution to 40 units, the mayor gives each firm 20 tradable pollution permits. Each permit allows a firm to emit one ton of pollution. Assuming each permit has a market value is $200, what is the cost of reducing pollution to the desired level?
a.$2,000
b.$4,000
c.$8,000
d.$10,000
Suppose the United States has two utilities, Commonweath Utilities and Consolidated Electric. Both produce 20 million tons of sulfur dioxide pollution per year. However, the marginal cost of
reducing a ton of pollution for Commonwealth Utilities is $200 per ton and the marginal cost of reducing a ton of pollution for Consolidated Electric is $225 per ton. The government's goal is to cut
sulfur dioxide pollution in half (by 20 million tons per year).
If the government issues 10 million tradable pollution permits to each utility, what will be the cost of eliminating half of the pollution to society?
million per year.
Using a cap-and-trade system of tradable emission allowances will eliminate half of the sulfur dioxide pollution at a cost of $
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents
are trying to determine how large, in acres, they should build the public park. The following table shows each
resident's willingness to pay for each acre of the park.
Acres
1
2
3
4
5
6
7
Sophia
0 acres
O1 acre
2 acres
10
8
6
3
1
O3 acres
0
Willingness to Pay (Dollars)
Amber
Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to
split the cost of building the park equally. If the residents vote to determine the size of park to build, basing
their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the
largest park size for which the majority of residents would vote "yes?"
24
18
14
8
6
4
2
Cedric
6
5
4
3
2
1
0
Chapter 4 Solutions
ECONOMICS W/CONNECT+20 >C<
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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