Carbon dioxide emissions have been linked to worsening climate conditions. The following table lists some possible public policies aimed at reducing the amount of carbon dioxide in the air. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Public Policy Command-and-Control Policy Tradable Permit System Corrective Subsidy Corrective Tax The government limits total carbon-dioxide emissions by all factories to 130,000 tons per decade. Each individual factory is given the right to emit 170 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace.           Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $480 to any citizen who plants a tree.           The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere.           The government charges factories $480 for every ton of carbon dioxide they emit.

Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 24 - 2E_1 MAC_2 = 20 - E_2, and assume marginal external damages (MED) from the aggregate emissions of both firms (E_Agg = E_1 + E_2) is: MED = 2E_Agg. To achieve the socially efficient level of aggregate emissions (E*_Agg), the government institutes a cap and trade policy and sets the cap equal to the socially efficient level of emissions (E*_Agg). If firm 2 is initially grandfathered 5 permits, it will buy more permits. (Note: your answer can be positive or negative; if it is positive, the firm is buying additional permits; if it is negative, the firm sells permits. So, for example, an answer of -10 implies that the firm sells 10 permits)

(Figure: Output Levels II) The socially optimal output level could be achieved by a government quota of: Price ($) 100 80 60 40 20 0 SMC S = MC 100 200 300 400 500 Quantity of electricity 250 units of electricity. approximately 212 units of electricity. 175 units of electricity. 100 units of electricity.

Explain why each is or is not a pure public good. Where applicable, note instances where the good is both publicly and privately provided:Sewage collectionCollege educationTelephone service

Discuss how rationing impure public goods would limit consumption of the following (USE PROPER DIAGRAM) : i. Roads :   ii. Healthcare   iii. Public recreational parks

how a tax on pollution affects the market equilibrium, consumer surplus, and producer surplus (Ctrl) ▼

What exactly is a Pigovian tax? Give some instances of how the Pigovian tax can be used to tackle environmental issues.

Provide examples of environmental problems that can be solved with the Pigovian tax.

Given the following information:  Initially, a perfectly competitive market for a product is in equilibrium, with an upward-sloping straight-line market supply curve, a downward-sloping straight-line market demand curve, and a market price of $30 per unit.  Consumption of this product causes pollution.  Initially, the marginal external cost of the pollution caused by consuming the product is $9 per unit.  There is no government policy toward the externality. The government then mandates a shift to a new product version, and all firms adopt and produce the latest version.  Consumers view the new product version as equally as good as the initial product version. Consumption of the new version of the product causes less pollution, and the marginal external cost decreases by $3 per unit.  For each firm, production of the new product version does not change fixed cost, but it does increase average variable cost by $3 per unit. If necessary, the market adjusts to a new equilibrium.  There is…

Airports generate many negative externalities including noise, air and water pollution, traffic and habitat loss. On the other hand, airports generate many economic benefits to local economies and provide a useful form of transport for residents of the areas where they are built.