The table below shows the marginal cost for three firms to clean up units of pollution. Marginal Cost ($) to clean... 2 tons of pollution Firm 1 ton of pollution 3 tons of pollution US Steel 155 580 860 Ford 220 865 1280 Apple 1200 1600 1915 Suppose the government gives every firm enough permits so that, without trade, every firm must clean two units of pollution. What. will the cost be to every firm, and the cost to clean 6 units of pollution? The market price for a permit is $1400. Net Cost for US Steel = $ Net Cost for Ford = $

The table below shows the marginal cost for three firms to clean up units of pollution. Marginal Cost ($) to clean... 2 tons of pollution Firm 1 ton of pollution 3 tons of pollution US Steel 155 580 860 Ford 220 865 1280 Apple 1200 1600 1915 Suppose the government gives every firm enough permits so that, without trade, every firm must clean two units of pollution. What. will the cost be to every firm, and the cost to clean 6 units of pollution? The market price for a permit is $1400. Net Cost for US Steel = $ Net Cost for Ford = $

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 3WNG

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In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between K and L, can you say which one is better and why? In the choice between K. and N, can you say which one is better, and why? If you had to guess, which choice would you think is move likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
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There are three industrial firms in Kitona. The Government wants to reduce pollution to 120 units, so it gives each firm 40 tradable pollution permits. Firm Initial Pollution Level Cost reducing pollution by 1 unit A 70 Units $20 B 80 Units $25 C 50 Units $10 Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation?
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There are three identical firms in Happy Valley. Firms Initial Pollution Level Cost of Reducing Pollution by 1 unit A 30 units $20 B 40 units $30 C 20 units $10 The government wants to reduce total pollution to 60 units, so it gives each firm 20 tradable permits. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so? What is the total cost of pollution reduction in this situation? How much larger would the cost of pollution reduction be if the permits could not be traded?
Explain: “Without a market for pollution rights, dumping pollutants into the air or water is costless; in the presence of the right to buy and sell pollution rights, dumping pollutants creates an opportunity cost for the polluter.” What is the significance of this opportunity cost to the search for better technology to reduce pollution?
The table below shows the marginal cost for three firms to clean up units of pollution. Marginal Cost ($) to clean... 2 tons of pollution 425.00 745.00 1515.00 Suppose the government gives every firm enough permits so that, without trade, every firm must clean two units of pollution. What will the cost be to every firm, and the cost to clean 6 units of pollution? The market price for a permit is $1410. Net Cost for US Steel = $ Net Cost for Ford = $ Firm 1 ton of pollution 145.00 US Steel Ford 225.00 Apple 1300.00 Net Cost for Apple = $ Societal cost to clean = $ → 3 tons of pollution 870.00 1280.00 1975.00 →
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4. a. If improved technology causes firms' abatement costs to fall, how, if at all, does this affect the amount of pollution that firms will emit when there is a tax? Explain briefly with a diagram.