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Chapter 12: Q.6 (page 293)

Classify the following pollution-control policies as command-and-control or market incentive-based.

a. A state emissions tax on the quantity of carbon emitted by each firm.

b. The federal government requires domestic auto companies to improve car emissions by 2020.

c. The EPA sets national standards for water quality.

d. A city sells permits to firms that allow them to emit a specified quantity of pollution.

e. The federal government pays fishermen to preserve salmon.

Short Answer

Expert verified

(a) Market incentive based

(b) Command and control based.

(c) Command and control based.

(d) Market incentive based

(e) Market incentive based

Step by step solution

01

 Command and control policy :

The enforced environmental policy is directed by command-and-control policy. It depicts a certain form of regulation.

02

(a) Explanation :

(a) Emission taxes are incentive-based because they allow companies to choose whether to produce pollutants and pay additional taxes or to restrict emissions and save money on taxes.

03

(b) Explanation : 

(b). If the automobile firms refuse to comply, the government will simply prohibit them from selling in non-regulated markets. They must adhere to government policies.

04

(c) Explanation : 

(c). If the industries do not meet with the EPA's water quality criteria, they will be phased out of the market.

05

(d) Explanation : 

(d). When the city allows businesses to sell a particular number of goods in the market while adhering to certain emission standards, this is an example of a market-oriented strategy since it gives businesses the freedom to make their own decisions.

06

(e) Explanation :

(e). Fishermen get incentives from the government to conserve salmon, which is a type of market incentive scheme for salmon protection.

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Most popular questions from this chapter

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?

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?

Identify the following situations as an example of a negative or a positive externality:

a. You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds.

b. Your neighbor paints his house a hideous color.

c. Investments in private education raise your country鈥檚 standard of living.

d. Trash dumped upstream flows downstream right past your home.

e. Your roommate is a smoker, but you are a nonsmoker.

Is zero pollution possible under a marketable permits system? Why or why not?

For each of your answers to Exercise 12.2, will equilibrium price rise or fall or stay the same?
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