There are two power plants in a country and both are damaging to the environment. Together they emit 500 tons of sulfer dioxide per month, but the government would like to reduce emissions to 50 tons (eд+ eg 50). The firms have the following Marginal Abatement Cost Curves: MACA 300-3еA MAC 200-2eB Given that the government wants to use an optimal effluent tax to reduce the total combined level of emissions to 50 tons, what is the optimal number of emissions for firm A under this effluent tax? 40 40 Question 2 Using the information in question 1A, what is the optimal number of emissions for firm B? 10 Question 3 Using the information in question 1C, what is the optimal effluent tax? 180 Question 4 1 pts 1 pts 1 pts Using the information from question 1A, what is the total cost (tax cost abatement cost) for firm A? (hint: you may want to draw a graph to help you answer the question). 12.600

A utility company is closely monitoring a new set of federal guidelines recently passed by the EPA (Environmental Protection Agency) regarding allowable green house (CO2) emission levels. In this example, the primary external factor of concern for the utility company in question. environment is the A Technological Regulatory (also political and legal) C Competitive D Economic

109 83 35 38 T B a V Y D₂ 223 634 1374 Emissions Consider the figure above if the government imposes a cap and trade system with a cap of 925 units of emissions, then what areas reprosent the total cost of abatiment? E 925 W

Suppose a power generating plant emits particulates that damage crops and affect human health. The relationship between emissions and environmental damage is represented by the marginal damage function, MD=9e where e represents tons of emissions per month. The cost to the firm (and society) of eliminating emissions is represented the marginal abatement cost function, MAC=108.5 - 6.5e Both MD and MAC are dollar costs per month. If the power generating firm were allowed to ignore the social cost of its emissions, what would be the firm’s monthly emission level? Calculate the socially efficient level of pollution. If the emissions calculated in part B is a level found to shorten some people’s lives, could it still be considered socially efficient? Suppose the EPA set an emission standard at the socially efficient level calculated in part B.  Calculate the cost to the firm of achieving this standard. Suppose that instead of a standard, the EPA charged an emissions tax. The tax is set at…

1. Suppose that the Marginal Abatement Cost function and the Marginal Damage function for an industry are given as follows: For simplicity here, we are assuming that they are linear. a. Graph the MAC and MD curves for this industry. Make sure you are marking out any and all relevant axis intercepts. MAC 100- 0.8e MD = 0.2e b. Suppose that an emission tax is imposed to achieve the efficient outcome, at what value should the government set the tax? Explain. c. e. At the efficient tax established in part b. what is the expected level of emissions? Explain. d. At the efficient tax, what is the dollar amount of the tax payment by firms to the government? Explain. What is the total abatement cost incurred due to the tax? Explain. f. What is the total cost to the firm with this emissions tax? Explain. g. Which policy is more costly to the polluting firm? An efficient standard or an efficient emissions tax? Explain. Use numbers to support your answer. Hint for Question 1: remember from basic…

Gozilla Inc. can generate 100 (CO2) emissions without any regulation. The marginal control cost for Gozilla Inc., associated with emission reduction, is known MC=20+0.5Q where Q is reduced units. Suppose that the regulator impose an emission standard on Gozilla: According to the emission standard, the factory is allowed to emit 40 units. The level of reduction in the emission standard could be accomplished through an emission charge (quantity tax or penalty fee on emission). An emission charge of per emission unit would generate the target amount of reduction. Total (tax) revenue the regulator will collect as emission charges would be Hint: Type integers. Do not use thousands separators.

Rubidoux Adventures supplies professional guides for climbs up Mt. Rubidoux. The company has two guides, Rocky and Cliff. Because Mt. Rubidoux is a pretty easy climb, the company has only two customers, Ken and Lucy. The table below shows the guides' marginal costs for each climb as well as the customers' MWTP for guided climbs. Use this table to answer the questions that follow. Assume that only whole climbs are available. MCRocky (S/climb) Climbs MCClff MWTPKen MWTPLucy (S/climb) (S/climb) (S/climb) 1 4 1 24 22 2 6. 23 21 3 7 4. 21 18 4 11 7 19 16 13 9 17 11 16 12 14 8 7 19 14 11 6 21 16 9 3 What is Ken's reservation price? O a. 22 Ob. 23 OC 24 O d. 21

Consider an industry of 2 firms with the following marginal abatement cost functions: MAC1 = 300 – 30e1 MAC2 = 500 – 20e2 1. Calculate the total abatement cost for both firms of reaching the aggregate emissions level of 20 tons via the tax? Don’t include the tax payments. Firm 1’s Total Abatement Cost $_____ Firm 2’s Total Abatement Cost $______2. Suppose you want to limit aggregate emissions to 20 tons with a competitive tradeable emissions permit system. If Firm 1 is given 5 permits and Firm 2 is given 15 permits, after trading how many permits will each firm end up with?Firm 1:____Firm 2:____ Please give correct information, I been getting a lot of wrong answer so far.

Firms within the country of Anviliania are currently emitting pollutants. These pollutants cause damages within Anviliania. However, the pollutants also cause damages to the properties and health of residents of countries that share borders with Anviliania. The Marginal Abatement Costs of the firms in Anviliania can be represented by the equation MAC(Anvil.) = 750 -2.3 e The Marginal Damage Costs to the residents of Anviliania are given by MDC (Anvil.) =- - 40 + 10 e The Marginal Damage Costs to all residents (including the residents of Anviliania) are MDC (Globe) = -20+ 12 e a. Draw a diagram representing this situation. b. Determine the magnitude of the local market failure and the global market failure. c. Suppose that the Anvilianian government has given production subsidies to the firms in Anviliania. As a result, the firms have increased production (and the number of firms have increased.). Consequently, the aggregate MAC is now MAC' (Anvil.) = 800 - 2.3 e. Determine the…