1. Suppose the combined abatement standard is set at 20 units and firm J and firm K have TAC functions of TACJ = 0.25A^2 and TACK = 0.375A^2, respectively, and where A is the amount of pollution abatement. In order to minimize costs, firm J should abate units and firm K should abate ___ units. 12,8 10, 10 10, 12 6.5, 13.5 12, 10 14.5, 7.5 2. If the Total Abatement Cost for firm 1 and 2, respectively, are: TAC1 = 0.2A^2 and TAC2 = 0.4A^2, and where A1, A2 are the amounts of pollution abatement undertaken by the two firms, respectively. Suppose the combined abatement standard is 15 units, then the cost-effective abatement levels are units for firm 1 and units for firm 2. 7.5, 7.5 5, 10 10, 5 8, 44, 811, 4

1. Suppose the combined abatement standard is set at 20 units and firm J and firm K have TAC functions of TACJ = 0.25A^2 and TACK = 0.375A^2, respectively, and where A is the amount of pollution abatement. In order to minimize costs, firm J should abate units and firm K should abate ___ units. 12,8 10, 10 10, 12 6.5, 13.5 12, 10 14.5, 7.5 2. If the Total Abatement Cost for firm 1 and 2, respectively, are: TAC1 = 0.2A^2 and TAC2 = 0.4A^2, and where A1, A2 are the amounts of pollution abatement undertaken by the two firms, respectively. Suppose the combined abatement standard is 15 units, then the cost-effective abatement levels are units for firm 1 and units for firm 2. 7.5, 7.5 5, 10 10, 5 8, 44, 811, 4

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 12SCQ: Consider the case of global environmental problems that spill across international borders as a...

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Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.
What is a pollution charge and what incentive does it provide for a firm to take external costs into account?
A city currently emits 15 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this City. What is the optimal level of sewage for this city? How can you tell?
What is a marketable permit and what incentive does it provide for a firm to account for external costs?
Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
How can high-income countries benefit from covering much of the cost of reducing pollution created by low-income countries?
stion 10 « < Questi 4 points Marginal Cost to Eliminate (Dollars) Firm First Unit Second Unit Third Unit Fourth Unit A 54 67 82 107 57 68 86 108 54 66 82 107 D 62 73 91 111 The table shows the marginal costs for each of four firms (A, B, C, and D) to eliminate units of pollution from their production processes. For example, for Firm A to eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second unit of pollution it would cost an additional If the government wanted to reduce pollution from 16 units to exactly 8 units, which of the following fees per unit of pollution would achieve that goal? 70 O 85 O 87 O 80
QUESTION 19 Y the cost of smokestack scrubbers (to minimize polution) is $3000 and the damage of the polution to nearty farms is $5000, what will happen (per the Coase Theorem) when property rights are glven to the factory creating the pollution? O The scrubbers will not be instaled. O The sorubbers will be instaled. O We have no way of knowing whether or not the scrubbers will be installed.
cap-and-trade and windfall profitsA city called Seoul is suffering from high concentrations of mercury in the air, caused by burningcoal in power plants. There are two of these plants close to the city. The city’s mayor wants touse cap-and-trade to reduce emissions to a reportedly “safe” level of 60 tons. The two firms havethe following marginal benefits of emissions: MB1 = 100 – 2e1, MB2 = 25 – 0.5e2.a. How much mercury will each firm emit? What allowance price will prevail in themarket?Firm 2 hires a smart lobbyist who convinces the government that its profits are relatively low andthat it therefore deserves a generous allowance allocation. The government agrees and allocatesa1 = 20 allowances to firm 1 (for free) and a2 = 40 allowances to firm 2 (for free).b. What are the firms’ profits? Do any of the firms earn windfall profits? [Hint: compareprofits with and without regulation.] Windfall profits have been sharply criticized by consumer advocacy groups and politicians.c. What can…
500 450 The graph on the right may help in answering question 25 400 350 300 250 200 150 100 50 O 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Quantity Demand MC Exter nality MC private MC Social A competitive tire manufacturing industry spews emissions into the air at47 per tire a marginal cost of 1.5-q, where q is the quantity of tires produced per month (in thousands). The industry marginal cost, excluding the cost of emissions (private marginal cost), is 4 + 4•q, expressed in $ per tire. The inverse demand curve for tires is p = 480 - 3-q, also expressed in $ per tire. In order to achieve the socially efficient level of tire production, which takes into account the optimal level of air pollution, the government levies a tax on the industry. What is the efficient pollution tax? $84 per tire $101 per tire $152 per tire Price
. Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC=40P Where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction the marginal increase in revenue (MR) is MR=1000-10P How much pollution reduction should Appalachian Coal Mining undertake?
27. Esther and Karin each own a polluting plant. Esther's plant has a marginal treatment cost = 5T ($5 for the 1st ton, 5(2)=$10 for the 2nd ton ...) and Karen's plant = 8T ($8 for the 1st ton, 8(2)=$16 for the 2nd ton .). Suppose that the government plans to levy pollution emission fees to reduce the total pollution by 20 tons. How much pollution emission fees ($) will need to be collected to meet the government's target? In the range of a. 50 to 59 b. 60 to 69 C. 70 to 79 d. 80 to 89