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91Ó°ÊÓ

From an economist's perspective, is it sound policy

to pursue a goal of zero pollution? Why or why not?

Short Answer

Expert verified

Achieving zero pollution is the most equitable for the world, however, it isn't asensible aim.

Step by step solution

01

Step 1. Introduction

The term "zero pollution" refers to a low quantity ofpoisons and trash released by businesses, to the point where it has no negative impact on the environment around it.

02

Step 2. Explanation

In a society where firms engage in production and distribution, positive and negative externalities will also take place. By producing and consuming there are numerous byproducts and consequences from all levels of a product's life cycle. These environmental impacts can be hard to measure, which allows consumers to remain ignorant of the impacts of their consumption. However, information is imperfect at all levels, to know the full extent of the pollution created is impossible. While zero pollution would create an ideal world, getting to that comes with massive information, enforcement, and efficiency costs. Instead, what Economists call for is a term called a socially optimal level of pollution where social marginal benefits and social marginal costs are equal.

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Most popular questions from this chapter

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 16million gallons of raw sewage into a nearby lake. Table 12.8shows 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


50800
8 million gallons
1501300
4 million gallons
5001650
0 gallons
12001900

a. Using the information in Table 12.8, 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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