Microeconomics (6th Edition)
6th Edition
ISBN: 9780134106243
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 5, Problem 5.2.1RQ
To determine
What do the economists mean by an economically efficient level of pollution.
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Chapter 5 Solutions
Microeconomics (6th Edition)
Ch. 5 - Prob. 5.1.1RQCh. 5 - Prob. 5.1.2RQCh. 5 - Prob. 5.1.3RQCh. 5 - Prob. 5.1.4RQCh. 5 - Prob. 5.1.5RQCh. 5 - Prob. 5.1.6PACh. 5 - Prob. 5.1.7PACh. 5 - Prob. 5.1.8PACh. 5 - Prob. 5.1.9PACh. 5 - Prob. 5.1.10PA
Ch. 5 - Prob. 5.1.11PACh. 5 - Prob. 5.1.12PACh. 5 - Prob. 5.1.13PACh. 5 - Prob. 5.2.1RQCh. 5 - Prob. 5.2.2RQCh. 5 - Prob. 5.2.3RQCh. 5 - Prob. 5.2.4PACh. 5 - Prob. 5.2.5PACh. 5 - Prob. 5.2.6PACh. 5 - Prob. 5.2.7PACh. 5 - Prob. 5.2.8PACh. 5 - Prob. 5.2.9PACh. 5 - Prob. 5.2.10PACh. 5 - Prob. 5.2.11PACh. 5 - Prob. 5.3.1RQCh. 5 - Prob. 5.3.2RQCh. 5 - Prob. 5.3.3RQCh. 5 - Prob. 5.3.4PACh. 5 - Prob. 5.3.5PACh. 5 - Prob. 5.3.6PACh. 5 - Prob. 5.3.7PACh. 5 - Prob. 5.3.8PACh. 5 - Prob. 5.3.9PACh. 5 - Prob. 5.3.10PACh. 5 - Prob. 5.3.11PACh. 5 - Prob. 5.3.12PACh. 5 - Prob. 5.3.13PACh. 5 - Prob. 5.3.14PACh. 5 - Prob. 5.3.15PACh. 5 - Prob. 5.3.16PACh. 5 - Prob. 5.4.1RQCh. 5 - Prob. 5.4.2RQCh. 5 - Prob. 5.4.3RQCh. 5 - Prob. 5.4.4PACh. 5 - Prob. 5.4.5PACh. 5 - Prob. 5.4.6PACh. 5 - Prob. 5.4.7PACh. 5 - Prob. 5.4.8PACh. 5 - Prob. 5.4.9PACh. 5 - Prob. 5.4.10PACh. 5 - Prob. 5.4.11PACh. 5 - Prob. 5.4.12PA
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- Draw 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_forwardExplain why environmental pollution is regarded as a source of market failure. Briefly describe two different policies which a government might implement to reduce pollution.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 following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. Which quantity is socially optimal (i.e. what is the efficient quantity)? What is the deadweight loss generated by the externality?arrow_forwardIt’s common to think that reducing pollution is necessarily costly because to reduce pollution we need to tax firms who will then produce less. But can you think of one example in which pollution might not only be unpleasant but might actually reduce production?arrow_forwardWhat happens in the market for a good that pollutes the air when it is manufactured if government decides to tax consumers when the product is purchased? Will this reduce the amount of air pollution?arrow_forward
- Why is it more efficient to tax pollution than to tax the output that produces pollution? Show a diagram of possiblearrow_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_forwardEconomists define the efficient amount of fund pollutants as the amount that minimizes the sum of damage and control costs. Using this definition, they derive two general rules, one of which is that the efficient level of pollution is not generally zero. Briefly explain why this is true.arrow_forward
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