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Marginal Abatement Costs:
The marginal abatement costs of three firms are provided in the table below on page 109. Each firm is emitting now 10 tons/week. Therefore, the total emission of all firms is 30 tons/week. Suppose that society wants to reduce the level of emission by 50%, to 15 tons/week. Calculate the total cost of reducing the level of emission to 15 tons/week
Assuming equiproportionate decrease in emissions which of the following is correct:
- 69
- 96
- 100
Assuming equimarginal decrease in emissions which of the following is correct:
- 69
- 96
- 100
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- Explain the difference between regulating emissions via fees vs. standards. Which of the two would be more efficient if there are large differences between the firms’ marginal costs of abatement.The primary source of air pollution in the small town of Smokey, Nevada is a nearby steel mill. The local environmental agency has decided that the mill needs to reduce its emissions because the town's population is located directly downwind from it. Currently the agency is considering three different approaches to reducing pollution from the mill: a technology standard, an emission standard and an emission tax. Why might the owner of the mill prefer an emission standard to a technology standard that would produce the same level of emissions? a Because with emission standards the polluter is more flexible in selecting the technology that will minimize her abatement cost Ob. Because polluters usually try to stick to their existing technology O C. Because it has been proven to be easier to implement O d. Because polluters, as all producers are suspicious about new technologiesQuestion 1.6 Suppose there are two firms (polluters) and their estimated emission reduction costs are given as follows: MAC, =120 – Eq and MAC, = 200 – 2Eg. The environmental regulatory agency introduced a TEP market and allowed both firms to emit 50 units of emission per month. What would be the price of emission trade and how many permits will be traded? Show your calculations
- The table below gives the marginal abatement costs of three polluting firms in an industry. The industry is regulated with an emission tax of $6. Marginal abatements costs ($/ton) Emissions (tons/week) 10 Firm 1 Firm 2 Firm 3 0 0 2 3 4 2 12 3 18 4. 5 10 24 4 12 36 6. 3 14 60 18 72 8. 23 84 29 108 10 a. What level of emissions does each firm choose? Explain how they respond to the emissions tax. b. What are cach firm's total compliance costs? Show your work. c. What is the total level of abatement? Discuss whether this abatement is achieved at the least cost for society.The figure below shows the marginal benefit (demand) of polluting for two firms: Alpha and Beta. Before the introduction of a pollution tax, pollution is free, that is, MC = $0 per ton of emissions. Marginal Benefit (MB) to Firm Tax = $100 0 MB BETA MBALPHA 25 50 75 100 Emissions (tons) The government decides to impose a tax on pollution of $100 per ton of emissions. That is, the per-unit the tax is the marginal cost of polluting. Which of the follow are true? (Select all that are true.) a. As a result of the tax, the total emissions will decrease by 50 units b. The tax was intended to decrease production by 50 units for each firm. c. As a result of the tax, both firms will decrease emissions by the same amount d. After the tax is imposed, Firm Beta will emit 50 tons more pollution than Firm Alpha e. Before the tax is imposed, Firm Beta emitted more pollution than Firm Alpha f. As a result of the tax, total emissions from the two firms will be cut in half g. The amount of tax collected…No hand written solution Afirm has an industrial plant that emits pollutants into a town’s lake. The plant’s marginal abatement function is MAC= 200 – 0.5E and damages caused by its emissions are given by MD = 2E where emissions are in kg. per day. What is the socially efficient level of emissions from this plant? Illustrate this in a graph. As an incentive to reduce emissions to the socially efficient level, government offers to pay the firm for each kg. of emissions it abates per day from this plant. What subsidy per kg. should the government offer? If the plant abates to the socially efficient level of emissions, what total subsidy payment would the firm receive? Identify the area in your graph. How much better or worse off would the firm be compared to if it did no abating? Identify the area in your graph. What would be the net benefit to society if we pay the firm to reduce the plant’s emissions to the socially efficient level? Identify this area in your graph.
- Imagine a firm's marginal abatement cost function with existing technologies is: MAC = 30 – 2E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 15 – E. With a tax on emissions of $6, the benefits of adopting the new technologies are $_ Answer:The figure to the right shows the marginal cost of pollution abatement for two firms, A and B. The firms were initially abating 46 units of pollution each. Now they can trade pollution permits at a price of $22. As a result, firm A sells permits and firm B buys permits. Both firms are now better off and their total saving will be $ (Enter your answer rounded to the nearest whole number.) Dollars per Unit ($) 34 22 10 The Efficiency of Tradable Pollution Permits MCB 31 46 61 Quantity of Pollution Abatement MCA NImagine a firm's marginal abatement cost function with existing technologies is: MAC = 20 E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 100.5E. The adoption costs for the new technology are $4. If the government raises the tax on emissions from $2 to $4, the firm's total costs increase by $ HINT: Total costs include tax payments, total abatement costs, and (if relevant) adoption costs for the new technology. Question 14Select one: a. $20. b. $ 24. c. $10. d. $30.
- Refer to the Slide 23 of Chapter 5 Lecture note. Pick any amount of emission which is greater or less than E*=10 (also it must be less than Emax). And then prove that the emission at 10 tonnes per month is the best (most efficient).The following table shows the current level of toxic waste dumped by two firms and the marginal cost of cleaning up additional 10 lbs increments of waste. Suppose the government has imposed a pollution tax of $7 per 10 lbs of waste. Calculate the reduction in total pollution and the total cost to the firms of doing so? Current waste (lbs) Cost of reducing by 1st 10 lbs Cost of reducing by 2nd 10 lbs Cost of reducing by 3rd 10 lbs Cost of reducing by 4th 10 lbs Cost of reducing by 5th 10 lbs Firm A 60 $5 $10 $15 $20 $25 Firm B Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. 80 $2 $4 $6 $8 $10Consider the following graph that shows the marginal abatement cost (MAC) curve for a coal power plan for reducing local air pollution and the marginal damage (MD) curve for those living around the coal power plant. MD (E) MAC (E b. Emissions E-0 E EL E-Max AMax Or Abatement E A-0 What are the total abatement costs at E' (enter your answer with the letters and "+" signs as "a+b+c+d+e+f", without the quotation marks. What are the total abatement costs at E-0 (enter your answer with the letters and "+" signs as as "a+b+c+d+c+f", without the quotation marks. If the property rights were with the coal power plant how much Emissions would we see? (enter one of the following, "E-0", "E", "E1", "E-Max") If the property rights were with the people how much Emissions would we see? (enter one of the following. "E-0", "E", "E1 "E-Max") What is the socially optimal level of emissions (choose from one of the following and enter as written without the quotation marks, "E-0". "E"E1 "E-Max").
