Chapter 12: Problem 35
From an economic perspective, is it sound policy to pursue a goal of zero pollution? Why or why not?
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Chapter 12: Problem 35
From an economic perspective, is it sound policy to pursue a goal of zero pollution? Why or why not?
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Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?
Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and- control policy?
In the Land of Purity, there is only one form of pollution, called "gunk." Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations are chosen. $$ \begin{array}{l|l|l} \hline {\text { Combos }} & \text { Eco Output } & \text { Gunk Cleaned Up } \\\ \hline \mathrm{J} & 800 & 10 \% \\ \hline \mathrm{K} & 500 & 30 \% \\ \hline \mathrm{L} & 600 & 40 \% \\ \hline \mathrm{M} & 400 & 40 \% \\ \hline \mathrm{N} & 100 & 90 \% \\ \hline \end{array} $$ 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 \(\mathrm{K}\) and \(\mathrm{L}\), can you say which one is better and why? e. In the choice between \(\mathrm{K}\) and \(\mathrm{N}\), 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-andcontrol environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice \(\mathrm{L}\) or \(\mathrm{M}\) ? Why?
What is a marketable permit and what incentive does it provide for a firm to account for external costs?
Four firms called Elm, Maple, Oak, and Cherry, produce wooden chairs. However, they also produce a great deal of garbage (a mixture of glue, varnish, sandpaper, and wood scraps). The first row of Table 12.6 shows the total amount of garbage (in tons) that each firm currently produces. The other rows of the table show the cost of reducing garbage produced by the first five tons, the second five tons, and so on. First, calculate the cost of requiring each firm to reduce the weight of its garbage by one-fourth. Now, imagine that the government issues marketable permits for the current level of garbage, but the permits will shrink the weight of allowable garbage for each firm by one- fourth. What will be the result of this alternative approach to reducing pollution?
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