Chapter 12: Q.35 (page 297)
From an economist's perspective, is it sound policy
to pursue a goal of zero pollution? Why or why not?
Short Answer
Achieving zero pollution is the most equitable for the world, however, it isn't asensible aim.
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Chapter 12: Q.35 (page 297)
From an economist's perspective, is it sound policy
to pursue a goal of zero pollution? Why or why not?
Achieving zero pollution is the most equitable for the world, however, it isn't asensible aim.
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Will a system of marketable permits work with thousands of firms? Why or why not?
In the tradeoff between economic output and environmental protection, what do the combinations on the protection possibility curve represent?
Is zero pollution possible under a marketable permits system? Why or why not?
Suppose a city releases million gallons of raw sewage into a nearby lake. Table shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.)
Total Cost (in thousands of dollars) | Total Benefits (in thousands of dollars) | |
16 million gallons | Current situation | Current situation |
12 million gallons | 50 | 800 |
| 8 million gallons | 150 | 1300 |
| 4 million gallons | 500 | 1650 |
| 0 gallons | 1200 | 1900 |
a. Using the information in Table , calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs, and Industry Structure if you need a refresher on how to calculate marginal costs.
b. What is the optimal level of sewage for this city?
c. Why not just pass a law that firms can emit zero sewage? After all, the total benefits of zero-emissions exceed the total costs.
Show the market for cigarettes in equilibrium,
assuming that there are no laws banning smoking in
public. Label the equilibrium private market price and
quantity as Pm and Qm. Add whatever is needed to the
model to show the impact of the negative externality
from second-hand smoking. (Hint: In this case it is the
consumers, not the sellers, who are creating the negative
externality.) Label the social optimal output and price as
Pe and Qe. On the graph, shade in the deadweight loss at
the market output.
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