Suppose that the government knows the marginal cost, MC, curve of reducing pollution but is uncertain about the marginal benefit, MB, curve. With equal probability, the government faces a relatively high or a relatively low MB curve, so its expected MB curve is the same as the one in Figure 17.4. Should the government use an emissions fee or an emissions standard to maximize expected welfare? Explain. (Hint: Use an analysis similar to that employed in Figure 17.4.)
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- Suppose that you are an economic-policy advisor. Environmental groups are pressuring you toimplement the highest-possible carbon tax, whileindustry groups are pressuring you to implementno carbon tax at all. Both argue that their positionmakes more sense economically. Explain to themwhat the most-efficient tax level will be, and whythere are costs to setting the tax too high or toolowThere are two factories in a small town. Both of them emit carbon dioxide into the air. Their current monthly emissions, as well as their total costs for reducing emissions in 20-ton increments, are listed in the tables below. Factory 1 Current emissions (tons/month) 120 Total cost of reducing emissions by 20 tons/month $50 Total cost of reducing emissions by 40 tons/month Total cost of reducing emissions by 60 tons/month Total cost of reducing emissions by 80 tons/month Total cost of reducing emissions by 100 tons/month $150 $270 $410 $570 Factory 2 Current emissions (tons/month) 160 Total cost of reducing emissions by 20 tons/month $20 Total cost of reducing emissions by 40 tons/month $60 Total cost of reducing emissions by 60 tons/month $110 Total cost of reducing emissions by 80 tons/month $200 Total cost of reducing emissions by 100 tons/month $300[22] Suppose the regulator uses its BELIEF about the AMAC function to achieve efficient emissions control using a per-unit uniform emissions tax. a) What per-unit tax would the regulator set? b) What level of aggregate emissions would result given the regulator’s tax? [23] Suppose the regulator uses its BELIEF about the AMAC function to achieve efficient emissions control using a per-unit uniform emissions tax. a) What area(s) represent the welfare loss due to the uncertainty in aggregate marginal abatement costs? b) Which policy (taxes or permits) appears to result in a larger welfare loss due to uncertainty?
- A firm’s own MAC function = -29Q + 298. Suppose the emission tax is $95/ton/month. a. Draw the firms’ MAC curve and find the efficient level of emissions for the firm. b. Then what would be the total tax bill and total abatement cost at the efficient level of emissions? As a result, what would be the total cost for the firm? c.Explain why the firm would not reduce its emissions to 1 ton/month. Please explain each carefully.4G LTE 86 10:00 PM | 0.0KB/s 0 expert.chegg.com/ + Chegg Home Expert Q&A My solutions Student question [1] Notifications Time Left: 00:09:09 Arslan and Belgin consume two goods, q1 and q2. function is UA=qA1qA2 UB=qB1qB2. Their endowments are qA1=10,qA2-20, qB1-20,qB2-10. (a) Find the marginal rates of substation for each person. (b) Determine whether the endowment point is a Pareto efficient al- location. ( c) Find formula for the contract curve in terms of Arslan's goods, QA1 and A2. (d) Find the competitive equilibrium price when p2-1. 5. Arslan and Belgin consume two goods, 1 and 92. function is UA-QA9A2 UB QB,QB₂- Their endowments are 9A, 10, 9A₂ =20, 9B, = 20,98₂ = 10. (a) Find the marginal rates of substation for each person. (b) Determine whether the endowment point is a Pareto efficient al- location. (e) Find formula for the contract curve in terms of Arslan's goods, QA, and QA (d) Find the competitive equilibrium price when p2 = 1.EXPLAIN THOROUGHLY 1) What are some of the problems that result when a government prints money rather than raises taxes to pay its expenses? 2) How should user charges for government-provided goods and services be set to achieve efficientoutputs and usage rates of such products? 3) Indicate whether you agree with the following statement, and give your reasons for doing so: “Ifthe highways crossing the City of Koronadal were a pure public good, efficiency would require that the price to use the road be zero. However, during rush hour congestion, the road cannot be regarded as a pure public good and a toll should be charged for its use.” If an automated vehicle identification system were established for residents of the City of Koronadal who use the highways, how would you set tolls to achieve efficient use of the road? The AVI system would allow you to send a bill to each user of the road each month based on miles traveled on the road and the price you charge which could vary by time of…
- High-income people are willing to pay more thanlower-income people to avoid the risk of death.For example, they are more likely to pay for safetyfeatures on cars. Do you think cost–benefit analystsshould take this fact into account when evaluatingpublic projects? Consider, for instance, a rich townand a poor town, both of which are considering theinstallation of a traffic light. Should the rich town usea higher dollar value for a human life in making thisdecision? Why or why not?11 Consider a public good, G, that is shared by Consumer A and B. Each can purchase G at the price of $20 per unit. A's marginal benefit from this public good is given by MBA=50-G. If A thinks B is getting 10 units of G, then A's optimal contribution into G will be ? units. On the other hand, if A thinks B is getting 25 units of G, then A's will be optimal contribution into G will be ?unitsNext, we want to understand some of the mechanisms that can shape the behaviour of negotiators at the COP meetings For simplicity, consider two countries the US (U) and Fiji (F). Each country i € {U, F} can decide whether to impose a positive tax on the emissions of its polluting firms (T¿ > 0) or to impose no tax (7į = 0). Let's consider first the effect that the taxes on CO2 would have on emissions and on profitability. We can think of a representative firm that chooses whether to produce using a polluting technology (q = P) or a clean technology (q = C). The polluting technology generates profits of π(P) = 11 with certainty. The clean technology is new and comes with a risk of lowering profits. In particular, with probability & the profits with the clean technology will be π(C) = 12 but with probability the profits with that technology will be π(C) = 4. Assume that when the firm is indifferent between the two technologies, it chooses the clean technology. 1. 2. In the absence of…
- 9. Assume that the city government of Pollutersville taxes the production of electricity in an effort to make the market internalize the external cost imposed on society in the form of air pollution that is created when coal is burned to produce electricity. a. Draw a supply and demand diagram for electricity in Pollutersville. Be sure to label your axes, curves, and intercepts, as well as MSC, MSB, MPC, MSB curves and the amount of the tax. b. If the government imposes a tax equal to the amount of the marginal external cost generated by each kwh of electricity, is there any deadweight loss in the market? Explain in one sentence of less. C. Discuss the changes in welfare for consumers, producers, society, and those individuals affected by the pollution once the tax is imposed. 4National defense is a good that is nonexcludable and nonrival in consumption. Suppose that instead of national defense being paid for with tax dollars national defense is paid for by voluntary contributions from (potentially) all individuals within Latvia Bob, who is a Latvian citizen, must decide whether he wants to contribute to the national-defense budget. Further, suppose that there are a total of 10 citizens, including Bob. For the optimal amount of safety, each citizen should pay $10. Every $ contributed (by anyone) to the national defense leads to increased security, which each person values at $0.40. This means that every dollar spent on defense is worth $4.00 to Latvia as a whole How much does Bob personally value the increase in national defense when he contributes $10 to the defense fund? Bob's personal value: $ If contributions are voluntary, and assuming people rationally maximize their utility, what is the total contributed to national defense? total contributed…Are utilities a public good, by definition?