Suppose the marginal cost of pollution abatement is constant and equal to 10 percent of GDP for each 10 percent increase in pollution control. Given the following data for a $10 trillion economy, answer two questions, Level of Pollution Abatement (%) 0 (no pollution control) 10 20 30 40 50 60 70 80 90 100 (zero emissions) Marginal Benefit (5 trillions) 2.0 1.7 1.3 1.0 08 06 04 03 02 0.1 Instructions: Enter your responses based on the percentage values provided in the table a. Identify the optimal rate of pollution abatement Now suppose that the marginal costs of pollution abatement decrease to 6 percent of GDP for each 10 percent increase in pollution control because of improved pollution control technology and more efficient sources of renewable energy b. Identify the new optimal rate of pollution abatement

Suppose the marginal cost of pollution abatement is constant and equal to 10 percent of GDP for each 10 percent increase in pollution control. Given the following data for a $10 trillion economy, answer two questions, Level of Pollution Abatement (%) 0 (no pollution control) 10 20 30 40 50 60 70 80 90 100 (zero emissions) Marginal Benefit (5 trillions) 2.0 1.7 1.3 1.0 08 06 04 03 02 0.1 Instructions: Enter your responses based on the percentage values provided in the table a. Identify the optimal rate of pollution abatement Now suppose that the marginal costs of pollution abatement decrease to 6 percent of GDP for each 10 percent increase in pollution control because of improved pollution control technology and more efficient sources of renewable energy b. Identify the new optimal rate of pollution abatement

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Explain why the private provision of public goods leads to an inefficient level of public goods.
Use a graph to illustrate the quantity of pollution that would be emitted (a) after a corrective tax has been imposed and (b) after tradable pollution permits have been imposed. Could these two quantities ever be equivalent?
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PRICE (Dollars perton) 90 81 72 63 54 45 30 27 18 9 0 0 + I 40 60 80 100 120 140 160 180 200 QUANTITY (Millions of tons) 20 40 Demand Graph Input Tool Daily Demand for Pollution Rights Price (Dollars per ton) Quantity Demanded (Millions of tons) 9 180 Suppose the government has determined that the socially optimal quantity of chemical pollution is 140 million tons per day. Corrective taxes Tradable permits One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. A tax (or price in this case) of S of chemicals emitted will achieve the desired level of pollution. (?) Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of chemicals per day. To achieve the socially optimal quantity of pollution, the government auctions off 140…
• Draw a correctly labeled graph showing the MSC and MSB of pollution. Assume that all pollution costs are external. On your graph, show the market quantity of pollution if there is no government intervention and the efficient quantity of pollution Modulo 75.
(Figure: Nail Polish Externalities) In the figure, Sp (MPC) represents the private supply curve of a particular type of nail polish, whose manufacture is associated with the release of toxic chemicals into the atmosphere. SS (MSC) includes the costs of that toxicity borne by others. What area represents the total externality cost of this nail polish? a) abdc b) abef c) defc d) the total externality cost is unknown. (the answer is NOT b)
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Economics: Public Economics Question: 1 Table 3 The following table shows the marginal costs for each of four arms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second unit of pollution it would cost an additional $67. Refer to Table 3. If the government charged a fee of $90 per unit of pollution, how many units of pollution would the arms eliminate altogether? Guess: 11 Question 2: Refer to Figure 5 (Graph 4). Which graph illustrates a pollution permit program? a. the left graph b. both graphs c. the right graph d. neither graph Thank you for your help and support Instructor Agent!
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