A polluting firm dumps waste into the ocean during production. The loss in value due to damaging the fish stock is valued at $100,000 (you can think of this as lost profits for fishing firms). The firm could eliminate the pollution at a cost of $60,000 a year. Choose the statement that describes the expected efficient outcome if the polluting firm has property rights over the ocean. The firm continues to pollute The polluting firm pays the $60,000 to eliminate pollution The fishing firms pay the $60,000 to eliminate pollution

A polluting firm dumps waste into the ocean during production. The loss in value due to damaging the fish stock is valued at $100,000 (you can think of this as lost profits for fishing firms). The firm could eliminate the pollution at a cost of $60,000 a year. Choose the statement that describes the expected efficient outcome if the polluting firm has property rights over the ocean. The firm continues to pollute The polluting firm pays the $60,000 to eliminate pollution The fishing firms pay the $60,000 to eliminate pollution

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter13: Positive Externalities And Public Goods

Section: Chapter Questions

Problem 23P: HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow...

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wo firms, A and B, each currently dump 50 tonnes of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each tonne of pollution dumped into the river. It costs Firm A $100 for each tonne of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each tonne of pollution that it eliminates before it reaches the river. The government gives each firm 20 pollution permits. Government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. What is the total cost of reducing pollution if the firms are NOT allowed to buy and sell pollution permits from each other, and what is the total cost of reducing pollution if the firms ARE allowed to buy and sell permits from each other? A. $4500; $2500 B. $3000; $1500 C. $4500; $3500 D. $4500; $4000
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Assume the firm has historical emissions of 10 units of carbon and the government regulator gives the firm 7 permits to pollute. Each permit allows 1 unit of pollution.
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