Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 17, Problem 2.2CE
To determine
To describe: The effect on our analysis of CO2 emissions trading allowances rising in price to $20 halfway back to its $39 peak price per ton reached in 2008.
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Assume an emissions tax is set at t as in the figure above. How many units does Firm 2 abate under the tax?
Many economists favor a carbon tax as a way to discourage carbon emissions. Suppose such a tax were to be set at $20 per metric ton of carbon emissions (1 metric ton = 1,000 kilograms). Consider a 35% efficient coal-fired powerplant that produces 50MW of electricity. Given the carbon intensity of coal is 24gC/MJ, answer the following: a) What would the annual carbon tax be for this powerplant? Answer: $2.16 million/year
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There is a company that emits a moderate amount of fossil fuel emissions. It would cost them 10 dollars to reduce emissions by 1 tonne, an additional 15 dollars to reduce emissions by a second tonne, an additional 25 dollars to reduce emissions by a third tonne, an additional 30 dollars to reduce emissions by a fourth tonne, and an additional 100 dollars to reduce emissions for a fifth tonne. If the price for a 1 tonne of emissions in a cap-and-trade program is 25 dollars, how many tonnes of emissions is the company likely to reduce?
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Chapter 17 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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