Consider the following example: Firm A emits 1,000 tons of CO2 and Firm B emits 800 tons. The government passes a law that requires the firms to cut their combined emission by 20%. Suppose Firm A can cut emission at a cost of $10 per ton and Firm B has to incur $6 per ton. The logic behind cap-and-trade is that Firm A should cut ___________ of its emission and Firm B should cut _____________ of its emission. In this case, a potential price for the emission trade is _____ per ton. a. More than 20%; less than 20%; $11 b. More than 20%; less than 20%; $9.25 c. Less than 20%; more than 20%; $7.75 d. Less than 20%; more than 20%; $11 e. Exactly 20%; exactly 20%; $0

Give typing answer with explanation and conclusion

Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 11 - 2E_1 MAC_2 = 8.5 - E_2, and assume marginal external damages (MED) from the aggregate emissions of both firms (E_Agg = E_1 + E_2) is: MED = .5E_Agg. To achieve the socially efficient level of aggregate emissions (E*_Agg), the government institutes a per-unit tax on emissions.  In principle, firms could continue to emit pollution as they were in the absence of government intervention, but by cutting back on emissions, their total compliance costs (tax payment plus total abatement costs) goes down.  How much money can firms save if they reduce their emissions to E*_Agg in response to the tax? Answer:

Consider Product NE, which has a negative externality associated with its’ production and use ( i.e., the “Incidental Cost” of each unit of Product NE is greater than zero). You are told that : *  The “Efficient” Output of Product NE  = 100 units *  The Free-Market Equilibrium Output of Product NE = 125 units *  The Total Surplus ( to society) on Unit Number 50   ( i.e., on that one unit ALONE) is equal to $ 45 *  The Cumulative Surplus on the first 100 units produced is equal to $ 6,000 ( i.e., the sum of the surplus( to society) on ALL 100 units adds up to $ 6,000)   Is the Consumer’s Surplus + Producer’s Surplus on Unit Number 50 ( i.e., the sum of CS + PS) greater than $ 45, less than $ 45, or exactly equal to $ 45 ( just circle your answer) ?    Greater than $ 45                    Less Than $ 45                            Exactly $ 45                                                                                                                               *Draw a graph to…

Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 11 - 2E_1 MAC_2 = 8.5 - E_2, and assume marginal external damages (MED) from the aggregate emissions of both firms (E_Agg = E_1 + E_2) is: MED = .5E_Agg. To achieve the socially efficient level of aggregate emissions (E*_Agg), the government institutes a per unit subsidy to abatement equal to $____. Answer:

Explain clearly what a Carbon Tax is. Then explain clearly what an Emissions Trading scheme is.

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)

Consider two competitive firms with the following marginal abatement cost functions:     MAC1 = 100 – 2e1    MAC2 = 50 – 0.5e2 1. Without regulation, what is the total level of emissions Eu? 2. If a regulator wants to reduce aggregate emissions to 50 units cost-effectively, how much should each firm emit? Firm 1’s emissions level ________________ Firm 2’s emissions level ________________ 3. If a regulator wants to reduce aggregate emissions to 50 units cost-effectively, what uniform emissions tax should the regulator impose?

A couple of years ago, a global carbon tax seemed far from becoming a reality. However, the introduction of a such a tax now appears to be a possible and viable new instrument for mitigating climate change. The idea has been advocated by heads of international organizations, businesses and professional services firms (including PwC) and lobbyist for big companies (including the Business Council of Australia). Suppose that governments worldwide were to agree to implement a minimum carbon tax of 75 US dollars per tonne of C02 emissions. Further, suppose that you are the CEO of a manufacturer of affordable casual clothing. From this perspective, answer the following questions: Based on the article by Dr Alice Pirlot, explain how you would expect a global carbon tax to change the current laws and regulations that affect your business under the existing international legal framework. Suppose that your shareholders are only concerned with maximising the profits of your business, given the…

Consider two firms with the following marginal abatement costs (MAC) as a function of emissions (E): MAC_1 = 12-2E_1 MAC_2=9-E_2, and assume marginal external damages (MED) from aggregate emissions from the two firms (E_Agg) is: MED = E_Agg. Total external damages at the socially efficient level of aggregate emissions is Answer: 1