Some observers believe that the current levels of pollution in our society are too high. True or False: If society wishes to reduce overall pollution by a certain amount, it is efficient to have firms with lower costs reduce greater amounts of pollution than those with higher costs. True O False Which of the following statements is true about command-and-control approaches to reducing pollutions? Check all that apply. Command-and-control approaches are generally unable to target the firms that should undertake bigger reductions. Command-and-control approaches are efficient because they ensure each firm reduces the mandated amount of pollution. Command-and-control approaches often rely on uniform reductions among firms. 1 Economists argue that appropriate corrective taxes or tradable pollution rights will result in efficient pollution reduction. Which of the following statements support(s) this claim? Check all that apply. The government does not have to figure out which firms can reduce pollution the most. With corrective taxes or tradable pollution rights, firms spend less in research on pollution control. O Corrective taxes or tradable pollution rights give firms greater incentives to reduce pollution.

Air pollution creates a negative externality—a cost suffered by a third party as a result of an economic transaction. A standard solution to a negative externality is a Pigouvian tax, a tax that raises the marginal private cost of pollution emissions to the level of the marginal social cost. The socially optimal quantity of pollution emissions is then determined by the intersection of the marginal private benefit, or demand, curve and the marginal social cost curve. The article notes that "putting a dollar value on the benefits of cleaner air has been difficult." Assuming this problem has been resolved, in the accompanying diagram, move the endpoints of line Smarginal social cost to show the marginal social cost curve. Then move the line labeled "Tax" to show the amount of the tax needed to limit emissions to the socially optimal level.

5B. Two textile mills, located across a river from each other, are polluting the river. The marginal costs of pollution reduction for each firm are MCE₁ = 4E₁ + 4 MCE2 = 4/3E2 + 4/3, where E is the reduction in pollution from unregulated levels. The associated marginal social benefit is estimated to be MSB = 10-E, where E = E₁ + E₂. a. What is the socially optimal level of water-pollution reduction? c. If instead the government imposed a standard requiring each firm to equally reduce the level of pollution to achieve the socially optimal solution in part (i), what are the costs for each firm?

Consider a manufactured good whose production process generates pollution.  The demand for the product is Q=100-3P.  The market supply function is Q=P.  The marginal external cost is MEC=2Q.  What is the emissions tax that needs to be imposed to achieve the social optimum?  Illustrate on graph  What is the economic incidence of this emissions tax? In other words, what proportion of this tax will be paid by producers of this product and what proportion of the tax will be paid by consumers?

What is a negative externality?  What is an example of a negative externality?  What is a solution for dealing with a negative externality?

Chapter 10 The first government employee suggests reducing pollution through regulation. To meet the pollution goal, the government requires each firm reduce its pollution by 2 units. Complete the following table with the total cost to each firm of reducing its pollution by 2 units. Firm Total Cost of Eliminating Two Units of Pollution (Dollars) Firm A Firm B Firm C ☐☐ Method 2: Tradable Permits Meanwhile, the other employee proposes using a different strategy to achieve the government's goal of reducing pollution in the area from 1 6 units. This employee suggests that the government issue two pollution permits to each firm. For each permit a firm has in its possession, i 1 unit of pollution. Firms are free to trade pollution permits with one another (that is, buy and sell them) as long as both firms can agree on For example, if firm A agrees to sell a permit to firm B at an agreed-upon price, then firm B would end up with three permits and would nee reduce its pollution by only 1 unit…

Q. 1

Air horns impose many external costs on society: the risk of being deafened, the annoyance of being awakened in the middle of the night, and so on. Therefore, the market equilibrium quantity of air horns is not equal to the socially optimal quantity. The following graph shows the demand for air horns (their private value), the supply of air horns (the private cost of producing them), and the social cost of air horns, including both the private cost and external costs. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.

Hand written solution is not allowed please my dear.

What will a corrective tax equal to the external cost imposed on polluters result in? It will increase the level of pollution. It will force polluters to internalize the external cost resulting from their actions. It will eliminate all pollution. It will usually have NO impact whatsoever on pollution levels, but will generate tax revenue for the government.