Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 2SPPA
To determine
The quantity of electricity produced, marginal
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
This graph represents the tobacco industry.
IPrice
16
14
Social Cost
12
10
Private Cost
8
6
4
Demand
200
500 650
Quantity
a) Without any government intervention, what is the market determined price and quantity?
b) What is the price of the externality?
c) What is the socially optimal price and quantity?
d) What should the government do (impose a tax or provide a subsidy) to internalize this externality? What is the amount of the the corrective tax/subsidy needed to be to move the outcome from the
market equilibrium to the socially-optimal outcome?
Define pollution charge and will our economy be able to control pollution? Share your thoughts in a paragraph.
The table below shows the demand for pollution permits to emit hydrocarbons in a particular industrial park. Each permit allows the owner to release one tonne of pollutants into the atmosphere.
Price perPollution Permit
Quantity of Permits
$4,500
75
4,000
150
3,500
225
3,000
300
2,500
375
2,000
450
1,500
525
a. If no fee for a pollution permit were charged, how many tonnes of pollutants would be discharged into the atmosphere, assuming a straight-line demand curve? Quantity: tonnesb. Suppose government were to set a fee of $3,500 per pollution permit. How many tonnes of pollutants would now be dumped? What is the total revenue received by government? Quantity: tonnes
Total revenue: $ c. Suppose that a new technology allows for a significant reduction in hydrocarbons at a relatively low cost so that the demand for pollution permits in the industrial park drops by 150 tonnes. Assuming that government holds the permit fee at $3,500, how many tonnes of…
Chapter 10 Solutions
Foundations of Economics (8th Edition)
Ch. 10 - Prob. 1SPPACh. 10 - Prob. 2SPPACh. 10 - Prob. 3SPPACh. 10 - Prob. 4SPPACh. 10 - Prob. 5SPPACh. 10 - Prob. 6SPPACh. 10 - Prob. 7SPPACh. 10 - Prob. 8SPPACh. 10 - Prob. 9SPPACh. 10 - Prob. 10SPPA
Ch. 10 - Prob. 1IAPACh. 10 - Prob. 2IAPACh. 10 - Prob. 3IAPACh. 10 - Use the following information to work Problems 3...Ch. 10 - Prob. 5IAPACh. 10 - Prob. 6IAPACh. 10 - Prob. 7IAPACh. 10 - Prob. 8IAPACh. 10 - Prob. 9IAPACh. 10 - Prob. 1MCQCh. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQ
Knowledge Booster
Similar questions
- The rows in Table 12.7 show three market-oriented tools for reducing pollution. The columns of the table show three complaints about command-and-control regulation. Fill in the table by stating briefly how each market-oriented tool addresses each of the three concerns.arrow_forwarda. Place point A at the equilibirum outcome. Place point B at the socially efficient outcome. Market for cigarettes 10 Marginal social cost В Marginal private cost (supply) 8 A 7 Demand 4 3 1 30 60 90 120 150 180 210 240 Quantity of cigarettes (millions of packs) CO LO Price ($)arrow_forwardMacmillan Learning The accompanying graph depicts the marginal social cost (MSC) and marginal social benefit (MSB) of pollution emissions. Move the point, P, to the point representing the optimal level of pollution. What is the optimal quantity of pollution? metric tons The optimal quantity of pollution is not zero because: 1,000 Dollars 900 800 700 600 500 400 300 200 100 0 27 2 P 3 4 5 6 Metric tons of pollution 7 8 9 MSC MSB 10arrow_forward
- create a scipt about pollution as a social issue for a commercial video.arrow_forwardTable 1 shows the demand schedule for electricity from a coal burning utility. Table 2 shows the utility's cost of producing electricity and the external cost of the pollution created. With no pollution control, calculate the quantity of electricity produced, the price of electricity, and the marginal external cost of the pollution generated. With no pollution control, the quantity of electricity produced is The price of electricity is cents a kilowatt. kilowatts a day. Table 1 Table 2 Price (cents per kilowatt) 4 8 12 16 20 24 Quantity (kilowatts per day) 0 100 200 300 400 500 Marginal cost 0 2 4 6 8 10 Quantity demanded (kilowatts per day) 500 400 300 200 100 0 Marginal external cost (cents per kilowatt) 0 2 4 6 8 10arrow_forwardParagraph Styles ILOS: A2, C2 Editing Voice 4. The paper industry has the demand and supply curves shown below: Price of paper Quantity demanded Quantity supplied 80 40 70 50 4 60 60 50 70 a. Suppose that this industry results in extreme externalities. What can be said about its optimal output? b. Draw the supply and demand curves for paper. Does the supply curve reflect the true social costs of producing the product? If not will a supply curve reflecting the true social costs lies above or below the supply curve you have drawn? c. What is the equilibrium price of paper? From the point of view of reflecting the true social costs, is this price the correct one, or too low or too high?arrow_forward
- D Question 7 Noise generated by an airport best illustrates. market power. overproduction of private goods. an externality. an inequity.arrow_forwardRefer to the Figure. This graph represents the market for cigarettes. This market Price 34 32 30 28 26 24 Social Cost 22 20 Private Cost 18 16 14 12 10 8 4 2 Demand 200 500 600 Quantity has no externalities. would benefit from a tax. would benefit from a subsidy. has no need for government intervention.arrow_forwardOregon legislative committee passes cap-and-trade bill Lawmakers are moving Oregon a step closer to adopting what would be the nation's second economywide carbon pricing scheme. after California. Price and cost (cents per mile) Q 40- S=MC a G Source: Portland Business Journal, May 17, 2019 35 The transportation sector is Oregon's largest contributor to carbon emissions. Under what conditions would Oregon's carbon pricing scheme reduce carbon emissions to the efficient quantity? Use a graph to illustrate your explanation. Show the effects of setting the price of carbon too low and too high. 30- 25 20 15 and permits traded at a The efficient quantity of transportation would be produced if the quantity of permits was set such that, price OA. marginal private cost of transportation equals marginal benefit, above marginal external cost B. marginal social cost of transportation equals marginal benefit, equal to marginal external cost OC. marginal social cost of transportation equals marginal…arrow_forward
- Which one does not belong to the externalities contributed by oil? a. Emissions that pollute the environment. b. National security c. Hydrocarbons that potentially contribute to climate d. Mercury emission from burning oil to produce electricity.arrow_forwardWhat is the air pollution policy in the United States?arrow_forwardUsing a diagram, explain how a carbon tax could help reduce pollution.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning