Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 6, Problem 14CTQ
The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called “closing the Washington Monument.” When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing
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for the 2nd part the last option got cut off, there is also a none of the above choice too
MCB
MCA
The figure to the right shows the marginal cost of
pollution abatement for two firms, A and B. The firms were
initially abating 36 units of pollution each. Now they can
trade pollution permits at a price of $32. As a result, firm
permits and firm B
A
permits.
Both firms are now better off and their total saving will be
(Enter your answer rounded to the nearest
$
whole number.)
Dollars per Unit ($)
44
32
20
The Efficiency of Tradable
Pollution Permits
31 36 41
Quantity of Pollution Abatement
k
-6°C Mostly clear
Next
The figure to the right shows the marginal costs of
abatement for an industry's only two firms, A and B.
These firms were initially abating 30 units of pollution (the
vertical dashed line). Now they can trade permits. The
market price for permits under which an efficient pollution
abatement will be achieved is $
rounded to the nearest whole number.)
192
176-
160-
(Enter your response
144-
128-
112-
96
80-
64-
48-
32-
16
0
0
MC
MCB
10 20 30 40 50 60 70 80 90 100 110 12
Pollution Abatement
-6°C Mostly clear
Next
Chapter 6 Solutions
Principles of Economics 2e
Ch. 6 - Jeremy is deeply in love with Jasmine. Jasmine...Ch. 6 - Take Jeremys total utility information in Exercise...Ch. 6 - Explain all the reasons why a decrease in a...Ch. 6 - As a college student you work at a part-time job,...Ch. 6 - Who determines how much utility an individual will...Ch. 6 - Would you expect total utility to rise or fall...Ch. 6 - Would you expect marginal utility to rise or fall...Ch. 6 - Is it possible for total utility to increase while...Ch. 6 - If people do not have a complete mental picture of...Ch. 6 - What is the rule relating the ratio of marginal...
Ch. 6 - As a general rule, is it safe to assume that a...Ch. 6 - Why does a change in income cause a parallel shift...Ch. 6 - Think back to a purchase that you made recently....Ch. 6 - The rules of politics are not always the same as...Ch. 6 - Income Effects depend on the income elasticity of...Ch. 6 - Praxilla, who lived in ancient Greece, derives...Ch. 6 - If a 10 decrease in the price of one product that...
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- Consider an economy in which there are two polluters: A and B. The marginal cost of pollution abatement curves are given in the diagram to the right. The total cost of reducing pollution by 60 units if it is done efficiently or $ equals $ if it is done by forcing each firm to reduce pollution by 30 units. OA. 925; 1125 OB. 900; 1100 OC. 850, 1050 OD. 800, 1000 OE. None of the above The efficient levels of pollution reduction can be achieved by using a pollution tax equal to $ unit A. 25 0 per MC 45 40 35 30- 25 20- 15 10- 5- Marginal Abatement Cost ($) 10 20 30 40 50 60 70 80 Pollution Abatement -6°C Mostly clear Next 90arrow_forwardis initially abating Q units of pollution. Suppose that a system of tradeable pollution permits is introduced into this market and the equilibrium permit price is P* Firm B will sell permits to Firm A because OA. Firm A has lower costs of pollution abatement than Firm B. OB. Firm B's total cost of abating more pollution (area 1) is less than the revenue it earns from selling the permits (areas 5+3). OC. Firm B's total cost of abating more pollution (areas 3+1) is less than the revenue it earns from selling the permits (areas 5+3+1). OD. Firm B can buy the permits at a lower price than Firm A OE. the revenue Firm B earns from selling permits (areas 3+1) is greater than the cost it incurs from abating more pollution (area 1). Dollars per unit Q₁ Qo Q2 Pollution Abatement ил Next -6°C Mostly clear MCA MCBarrow_forwardThe accompanying diagrams show the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2. If the government requires each firm to abate Q units of pollution, the social costs of this abatement OA. could be reduced further if Firm 2 increased abatement and Firm 1 reduced its abatement by the same amount OB. could be reduced further if each firm was required to abate more. OC. could be reduced further if each firm was allowed to pollute more. OD. would be minimized. WOE could be reduced further if Firm 1 increased abatement and Firm 2 reduced its abatement by the same amount. Dollars 5 Firm 1 MC1 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Abatement Q Firm 2 6- MC2 E 屈 Dollars -6°C Mostly clear Nextarrow_forward
- The diagram to the right illustrates a competitive industry in which there is a negative production externality. If a tax equal to $20/unit (i.e., a tax equal to the marginal external cost) is imposed, then the net social benefit will OA. fall by area A+ C. OB. rise by area B+C. OC. fall by area C. OD. rise by area B. OE. None of the above. W Marginal Benefit, Marginal Cost ($) 50 MCS MCp 45 35 30- 25 20 15 10- 5 0- 0 B D 10 20 30 40 50 60 70 80 90 100 110 Quantity -6°C Mostly clear Nextarrow_forwardNot use ai pleasearrow_forwardProblem 3 Simple Bivariate Regression Consider the following bivariate regression model: NAMEUIN Page 1 of 2 = Hourly Wages, Bo+B₁Education; + & where Education measures the years of experience at the job for an individual and Hourly Wage is the hourly wage in dollars. The subscript i indexes various people. You run a bivariate OLS regression to estimate Bo and B₁. Suppose you estimate B = 10 and B a. 0 = 2 How do you interpret the estimates ßo and ß₁ in this context? (3 points) 1 b. Define the terms "predicted/fitted value" and "residual”. (3 points) c. Suppose that for some individual, the predicted value of Hourly Wage is $20, and the residual is 2. What is the actual Hourly wage for the individual? Show your work. (4 points) d. Suppose that some individual has 10 years of Education, and his actual hourly wage is $35. What is the predicted outcome and residual for this individual? Show your work. (5 points)arrow_forward
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