Economics

Refer to the above table. How much money was saved (between the two firms) to reduce emissions by 1 ton each by allowing for tradable pollution permits?:

The regulatory measures target the emissions from industries as well as the products resulting from certain industries. The agency establishes certain regulations that seek to standardize the emissions in terms of quantity and if companies are found

1. (10 pts.) Stella Ann Freeman is having a difficult time deciding whether or not to purchase a new car. How would understanding the concept of opportunity costs help her make a decision?

A cap-and-trade program sets a maximum level of pollution, and distributes emission permits among firms that produce emissions (Carbon Tax, 2013). The purpose of which is regulation of specific emissions by stationary and mobile sources, and setting a specific level which all emitters are re-quired to meet. Cap-and-trade possibly has less of a direct economic component to it than the other alternatives to reducing emissions described due to the ability to trade permits versus the expendi-ture of resources improving technology, with some arguing it is to the detriment of the environment. As stated in the article found in Reclaiming the Environmental Agenda, by Ashford, N. et al., 2008, “being a market-based instrument, ‘the cap-and-trade option suggests that at least this form of MBI may be more environmentally effective than the usual command-and-control alternatives, in addition to being more economically efficient.” (Ashford, N. and Caldart, C., 2008, p. 908).

The car firm does not care about the pollution. The owner is simply interested in maximizing profits. The equilibrium price for him is where demand equals his supply curve, at point B, so output will be Q1 with price at P1. Given that there is pollution, though, the optimal point for the whole of society is at C, where output is Q2 and price P2. Hence, if left to the free

Government intervention corrects market failure resulting in environmental sustainability and improved accessibility to services. Goods or services with negative externalities are market failures because the operation of the price mechanism

In Australia, there is an emerging consensus that the government should take further actions to help mitigate and combat climate change. The current most accepted policy by government is the introduction of a carbon tax followed by an ETS in 2015. However we are focusing on the carbon tax in this essay and not the ETS. Here is a brief explanation of the dynamics of a carbon tax. A carbon tax is a tax on energy sources, which emit carbon dioxide (Co2). Therefore, carbon taxes address the problem of negative externality. Externalities are the subsequent effects when individual production or consumption of a particular good or service imposes costs or benefits on others. Therefore negative externalities are effects, which pose harm to others without their direct interaction (Basic Economics 2011). However, usual market practices and transactions do not reflect these cost and benefits in the prices involved in the transaction, or take into account in their transaction decision. Therefore this is a form of market failure. By imposing a cost on these negative externalities, the hidden cost can be addressed. Ultimately the purpose of a carbon tax is to reduce emissions of carbon dioxide and therefore reduce

This assignment has a maximum total of 100 marks and is worth 10% of your total grade for this course. You should complete it after completing your course work for Units 1 through 5. Answer each question clearly and concisely.

Like you can see there can be either costs, or benefits that affect those third parties. When it is a cost that is imposed on third parties, it is called a negative externality; negative externalities occur when a decision or activity imposes costs on anyone that is not involved in the making of the decision, that is if a decision imposes any kind of external cost, which are

Environmental taxation is when the government taxes items that are effecting the environment to cover the externality cost. The government taxes mostly on carbon based emissions as they are a major contributor to the climate change. Automobiles are a major contribution to effecting the environment. As shown below cars are the highest percentage on impacting the climate.

Regulations imposed by the government in any economy determine the market efficiency and growth. Policies and laws governing the flow of goods and out flow determined the internal trade affairs. When the government formulates policies and regulations, which is the market conducive, efficiency is enhanced. In such instances, the outcomes of the market yields can be predicted. Such ability of the policies and regulations to enhance efficiency in the markets can be enabling the government to have prior arrangements and plans concerning future economic goals. On the other hand, as the governing body there is a need to establish the effectiveness of the current policies in enhancing marketing efficiency. However, there is a need to establish the criteria for determining the correctness and effectiveness of the regulations which are to be set. Governing body should intervene in the control of the market regulations though independent bodies and private sectors should be involved in such regulations formulations. Many economies, such the United states and United Kingdom, the government has the power to intervene in the market policies. When the market fails in such instances, the government is blamed for the failure. The modern economies advocates for more freedom of choice in the formulation of regulations of the markets. Others concentrate on the efficiency of the policies and regulations in the achievement of the market goals.

Regulation means that the government sets rules to make it more difficult for firms to produce, for example, quantity restriction. If companies do not follow the regulation, they have to pay penalty. Permits means that the government can set a maximum allowed amount, and then it will issue permits to each firm. Firms can gain by reducing production or using cleaner methods to reduce pollution because permits can be traded and firms cannot exceed permitted amount. Tax is also a good way to remedy negative externalities. The government use tax to control the price, meanwhile to reduce the consumption. In most cases, tax rates of those externalities should equal to the value of the externality. (Alain Anderton.,

. Through the process of reading, I learned many things about the economy. First of all, I learned that it is a much more difficult decision to come to in regards of how much government involvement in the nation’s economy is enough, how much is too little, and how much is not enough. I also learned that trying to keep the economy stable and productive is a constant and difficult struggle, and that it is often difficult to even know what needs to or can be done in order to stabilize it. While I find economics to be somewhat boring (I am a music major and largely emotionally driven, which means that my entertainment is usually emotionally involving somehow), I actually enjoyed how Wheelan explained economics in this book. While I would not read it for fun, reading this book as an assignment was not painful.

Pollution, specifically global warming, is of growing concern to people and governments. It is a controversial issue whose validity is still being debated by scientists. The Kyoto Protocol is an international attempt to address global warming through emissions controls. Traditional neoclassical economic models do not incorporate pollution in rudimentary theories of supply, demand, or pricing, as a result, firms do not consider pollution as a cost of production, which leaves government regulation as the primary method for controlling these externalities. The goal of emissions trading is to allow one business, which can make greenhouse gas emission reductions for a relatively low cost, to sell

externalities keep the market from reaching allocative efficiency because the gains or losses generated are external to the pricing system; they are unpriceable. The transaction costs of externalities misallocation of resources or a failure of the market economy to generate a Pareto optimum. positive externalities 3 types of interventions the government may engage in: