Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 4, Problem 18SQ
To determine
The impact of pollution tax on the coal-fired power.
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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…
What happens in the market for a good that pollutes the air when it is manufactured if government decides to tax its production? Will this reduce the amount of air pollution?
Imagine a firm's marginal abatement cost function with existing technologies is:
MAC = 12 – E. If the firm adopts new pollution abatement technologies, its
marginal abatement cost function will be: MAC = 6 – 0.5E. The adoption costs
for the new technology are $6. If the government raises the tax on emissions
from $1 to $4, the benefits of adopting the new technologies increase by $.
Select one:
a. $7.50.
O b. $12.
C. $3.
O d. $4.5.
Chapter 4 Solutions
Micro Economics For Today
Ch. 4.2 - Prob. 1YTECh. 4.2 - Prob. 2YTECh. 4.2 - Prob. 3YTECh. 4.2 - Prob. 4YTECh. 4.3 - Prob. 1YTECh. 4.3 - Prob. 2YTECh. 4 - Prob. 1SQPCh. 4 - Prob. 2SQPCh. 4 - Prob. 3SQPCh. 4 - Prob. 4SQP
Ch. 4 - Prob. 5SQPCh. 4 - Prob. 6SQPCh. 4 - Prob. 7SQPCh. 4 - Prob. 8SQPCh. 4 - Prob. 9SQPCh. 4 - Prob. 10SQPCh. 4 - Prob. 1SQCh. 4 - Prob. 2SQCh. 4 - Prob. 3SQCh. 4 - Prob. 4SQCh. 4 - Prob. 5SQCh. 4 - Prob. 6SQCh. 4 - Prob. 7SQCh. 4 - Prob. 8SQCh. 4 - Prob. 9SQCh. 4 - Prob. 10SQCh. 4 - Prob. 11SQCh. 4 - Prob. 12SQCh. 4 - Prob. 13SQCh. 4 - Prob. 14SQCh. 4 - Prob. 15SQCh. 4 - Prob. 16SQCh. 4 - Prob. 17SQCh. 4 - Prob. 18SQCh. 4 - Prob. 19SQCh. 4 - Prob. 20SQ
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- What happens in the market for a good that pollutes the air when it is manufactured if government decides to tax consumers when the product is purchased? Will this reduce the amount of air pollution?arrow_forwardThe 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 per Pollution Permit Quantity of Permits $4,500 100 4,000 200 3,500 300 3,000 400 2,500 500 2,000 600 1,500 700 were charged, how many tonnes of pollutants would be discharged into the atmosphere, assuming a straight-line a. If fee for a pollution perm demand curve? Quantity: tonnes b. Suppose government were to set a fee of $2,500 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 200 tonnes. Assuming that government holds the permit fee at $2,500, how many tonnes of pollutants would now be dumped? What…arrow_forwardFirm A currently dumps 161 tons of chemicals into the local river. Firm B currently dumps 127 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives Firm A 13 pollution permits and gives Firm B 43 pollution permits. The abatement costs of one ton of pollution is $175 for Firm A and $60 for Firm B. What would be the total cost of reducing pollution, if the firms are allowed to trade permits between each other?arrow_forward
- There are three industrial firms in the county. -Firm A's initial pollution level is 50 units. Its cost of reducing pollution by 1 unit is $30. -Firm B's initial pollution level is 40 units. Its cost of reducing pollution by 1 unit is $20.-Firm C's initial pollution level is 30 units. Its cost of reducing pollution by 1 unit is $40.The government wants to reduce pollution to 90 units so it gives each firm 30 tradable pollution permits.(i) Who sells permits? (ii) How many do they sell? (iii) Who buys permits? (iv) How many do they buy?arrow_forwardWhat are pollution havens? How are they created or why do they exist? Why do economists think they may change over time and develop policies to reduce pollution?arrow_forwardThe market for Booming Berries contains a? a) Negative Externality b) Positive externality How can I tell distinguish if it contains a positive or negative externality with the given information?arrow_forward
- Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Introduce emission taxes Offer a subsidy to consumers equal to the vertical distance between the marginal private benefit curve and the marginal social benefit curve Implement tradable pollution permits Offer a subsidy equal to the price at the efficient outcome Offer a subsidy to producers equal to the vertical distance between the marginal private benefit curve and marginal social benefit curvearrow_forwardParks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.arrow_forwardParks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity. (?) Supply (Private Cost) Market Equilibrium Socially Optimal Level Social Value Demand (Private Value) QUANTITY OF PARKS PRICE OF PARKSarrow_forward
- Firm A currently dumps 243 tons of chemicals into the local river. Firm B currently dumps 126 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives Firm A 61 pollution permits and gives Firm B 65 pollution permits. The abatement costs of one ton of pollution is $113 for Firm A and $165 for Firm B. What would be the total cost of reducing pollution, if the government does NOT allow the firm to trade the permits between each other?arrow_forwardThere 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?arrow_forwardA) Figure 10-1 (above)- For the described negative externality, what is the market Price/Quantity combination without any efforts to correct the market? B) Figure 10-1 (above)- For the described negative externality, what will happen to the equilibrium price and quantity if the government imposes a tax to remedy the negative externality (don't use exact numbers)? C) For a negative externality, briefly explain why and how the governmentmay get involved in the market. In your response, provide an example (type of product or service).arrow_forward
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