How do marginal control costs of pollution and the marginal damage costs of pollution change as pollution level increases? OA. The marginal control costs of pollution remain constant and the marginal damage costs of pollution increase as pollution level increases OB. The marginal control costs of pollution and the marginal damage costs of pollution increase as pollution level increases OC The marginal control costs of pollution increase and the marginal damage costs of pollution decrease as pollution level increases OD. The marginal control costs of pollution decrease and the marginal damage costs of pollution increase as pollution level increases

How do marginal control costs of pollution and the marginal damage costs of pollution change as pollution level increases? OA. The marginal control costs of pollution remain constant and the marginal damage costs of pollution increase as pollution level increases OB. The marginal control costs of pollution and the marginal damage costs of pollution increase as pollution level increases OC The marginal control costs of pollution increase and the marginal damage costs of pollution decrease as pollution level increases OD. The marginal control costs of pollution decrease and the marginal damage costs of pollution increase as pollution level increases

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 10PA

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A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
From an economic perspective, is it sound policy to pursue a goal of zero pollution? Why or why not?
According to economists what is the optimal amount of pollution? O a. The optimal amount of pollution is where private costs equal social costs O b. Pollution should be reduced to a level as determined by government regulation O c. None, the goal is to completely eliminate pollution d. The point where the marginal benefit from further pollution reduction equals the marginal cost of further reduction
An increase in globalization has lead to an increase in pollution, and this is a problem because pollution is seen to be the classic example of a This is a that individuals impose on others but do not pay for. O negative externality, cost O possitive externality, benefit O negative externality, benefit O possitive externality, cost
The dry-cleaning industry is a major source of air pollution. Based on this information, which conclusion is the most likely to be true about the price and output of dry-cleaning services? O Because dry-cleaning does not have much demand, pollution is not affecting their demand. O Dry-cleaning is a complimentary good. O Dry-cleaners see it as less profitable to cause pollution. Because there are no financial consequences for the pollution, fixing it wouldn't be as profitable for dry-cleaners.
Figure 4 shows that for any given demand curve forthe right to pollute, the government can achieve thesame outcome either by setting a price with a correctivetax or by setting a quantity with pollutionpermits. Suppose there is a sharp improvement in thetechnology for controlling pollution.a. Using graphs similar to those in Figure 4, illustratethe effect of this development on the demand forpollution rights.b. What is the effect on the price and quantity of pollutionunder each regulatory system? Explain.
c. The government requires that auto manufacturers limit pollution to a specified threshold. tradable pollution permits O corrective tax command-and-control regulation private property rights
Which of the following is an example of environmental standards? O A. tradable pollution permits O B. taxes on the level of pollution OC. legal limits on SO2 emissions O D. none of the above
8. Preblems and Applications QB Suppose that the government decides to issue trachble permits for a certain form of pollution. In terms of economic efficiency in the market for pothition, having the governmerk ayction the permits off is detributing them to firmi. True or Falsen If the government chostes to divtribute the permits, the alocation of permits among firms does not matter for efficiency, but is would affect the distribuen of wealth True False
$ R с E -F5 % 5 6 OUL G Refer to Figure 10-7. This graph shows the market for pollution when permits are issued to firms and traded in the marketplace. The equilibrium number of permits is O a. 50. Ob. 1,000. O c. 2,000. O d. 100. Un PRICE (Dollars per unit) H & 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 F8 10 20 30 40 50 60 70 80 90 100 QUANTITY (Units of pollution) *.00 8 8 F9 Supply of Pollution Permits ( 9 JL U Demand for Pollution Permits F10 O --- ) O F11 + F12 PrtSc 1 J [ Insert
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?
The problem of excess pollution mainly occurs because of O asymmetric information. O a negative externality. O a monopoly. O a positive externality.