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Chapter 12: Q.39 (page 297)

Technological innovations shift the production

possibility curve. Look at graph you sketched for

Exercise 12.13 Which types of technologies should

a country promote? Should 鈥渃lean鈥� technologies be

promoted over other technologies? Why or why not?

Short Answer

Expert verified

Waste-reduction technology should be encouraged, and clean technologies in particular should be promoted.

Step by step solution

01

Introduction

The production potential curve is a graph that depicts several combinations of variables that are all equally productive.

02

Explanation

The graph shows that P,R,S are on the PPF curve and so productively efficient, whereas point T and S are inside the curve and thus not productive. Technology and innovation have the potential to shift the PPF curve to the right, making it more productive and efficient. Recycling, garbage treatment, and low-waste procedures are examples of technology that can help us achieve sustainable development.

Clean technologies are favored above other approaches since they focus on changing industrial processes and products that are more environmentally friendly rather than cleaning pipes and processing garbage.

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Most popular questions from this chapter

A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals

to clear some of Sherwood鈥檚 forest and grow corn, 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.

a. 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.

b. Which choices display productive efficiency? How can you tell?

c. Which choices show allocative efficiency? How can you tell?

d. In the choice between T and R, decide which one is better. Why?

e. In the choice between T and S, can you say which one is better, and why?

f. 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?

In the Land of Purity, there is only one form of pollution, called 鈥済unk.鈥� Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose.

a. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis.

b. Which choices display productive efficiency? How can you tell?

c. Which choices show allocative efficiency? How can you tell?

d. In the choice between K and L, can you say which one is better and why?

e. In the choice between K and N, can you say which one is better, and why?

f. 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 L or M? Why?

Consider the case of global environmental problems that spill across international borders as a prisoner鈥檚 dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can choose 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 countries.

a. 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.

Will a system of marketable permits work with thousands of firms? Why or why not?

Identify whether the market supply curve will shift right or left or will stay the same for the following:

a. Firms in an industry are required to pay a fine for their carbon dioxide emissions.

b. Companies are sued for polluting the water in a river.

c. Power plants in a specific city are not required to address the impact of their air quality emissions.

d. Companies that use fracking to remove oil and gas from rock are required to clean up the damage.
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