Suppose that there are only two polluters in a society. If left uncontrolled, polluter 1 emits 85 units of a pollutant, while polluter 2 emits 15 units. The polluters' marginal abatement costs are MAC1= 0.25a1 and MAC2=2a2. Policy makers have established that 28 units is the level to which emissions of the pollutant should be reduced. Determne the abatement responsibilities that should be assigned to each polluter in order to minimize total compliance cost. Illustrate with graphs. (thats all info question gave us)

Suppose that there are only two polluters in a society. If left uncontrolled, polluter 1 emits 85 units of a pollutant, while polluter 2 emits 15 units. The polluters' marginal abatement costs are MAC1= 0.25a1 and MAC2=2a2. Policy makers have established that 28 units is the level to which emissions of the pollutant should be reduced. Determne the abatement responsibilities that should be assigned to each polluter in order to minimize total compliance cost. Illustrate with graphs. (thats all info question gave us)

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 7SQ

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Similar questions

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?
Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?
Is zero pollution an optimal goal? Way or why not?
Would environmentalists favor command-and-control policies as a way to reduce pollution? Why or why not?
As the extent of environmental protection expands, would you expect the marginal benefits of environmental protection to rise or fall? Why or why not?
In what ways (it) company investments in research and development create positive externalities?
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?
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.
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