MACROECONOMICS FOR TODAY
MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
Question
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Chapter 5, Problem 12SQP

(a):

To determine

GDP and the sale of a used car.

(b):

To determine

GDP and the family meal cooked.

(c):

To determine

GDP and the interest on bonds.

(d):

To determine

GDP and the purchase of shares.

(e):

To determine

GDP and the welfare payment.

(f):

To determine

GDP and the commission earned on the resale of house.

(g):

To determine

GDP and the interest paid on government bonds.

(h):

To determine

GDP and the air and water pollution.

(i):

To determine

GDP and the legalized gambling.

(j):

To determine

GDP and the social security payments.

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Suppose there are two firms 1 and 2, whose abatement costs are given by c₁ (e₁) and C2 (е2), where e denotes emissions and subscripts denote the firm. We assume that c{(e) 0 for i = 1,2 and for any level of emission e we have c₁'(e) # c₂' (e). Furthermore, assume the two firms make different contributions towards pollution concentration in a nearby river captured by the transfer coefficients ε₁ and 2 such that for any level of emission e we have C₂'(e) # The regulator does not know the resulting C₁'(e) Τι environmental damages. Using an analytical approach explain carefully how the regulator may limit the concentration of pollution using (i) a Pigouvian tax scheme and (ii) uniform emissions standards. Discuss the cost-effectiveness of both approaches to control pollution.
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