37. (Figure: Three Firms that Pollute) Use Figure: Three Firms That Pollute. If the city imposes tons of mercury, and firm A a tax of $400 per ton of pollution, firm B will produce will produce tons of mercury than will firm C. Figure: Three Firms That Pollute Marginal benefit of individual polluter 0000 $1,000 900 800 700 600 500 400 300 200 100 0 Firm A Firm B Firm C 100 200 300 400 500 600 700 800 900 1,000 Quantity of mercury (tons) 700; 200 fewer 300; 500 more 300; 200 fewer 600; 200 fewer

37. (Figure: Three Firms that Pollute) Use Figure: Three Firms That Pollute. If the city imposes tons of mercury, and firm A a tax of $400 per ton of pollution, firm B will produce will produce tons of mercury than will firm C. Figure: Three Firms That Pollute Marginal benefit of individual polluter 0000 $1,000 900 800 700 600 500 400 300 200 100 0 Firm A Firm B Firm C 100 200 300 400 500 600 700 800 900 1,000 Quantity of mercury (tons) 700; 200 fewer 300; 500 more 300; 200 fewer 600; 200 fewer

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 9PA

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4. Understanding different policy options to correct for negativeexternalities Carbon dioxide emissions have been linked to melting of sea ice. The following table lists some potential regulations targeting the amount of airborne carbon dioxide. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Tradable Permit System Public Policy The government limits total carbon-dioxide emissions by all factories to 260,000 tons per five years. Each individual factory is given the right to emit 230 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $440 to any citizen who plants a tree. The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. The government charges…
(Figure: The Socially Optimal Quantity of Emissions from Coal Production) Use Figure The Socialy Optimal Quarety of Emissions from Coal Production in the figure, firms are the only beneficiaries of polution, and costs are borne solely by others in the society. Without government intervention Marginal social cost, marginal social benefit MSC of pollution MSB of pollution Quantity of pollution emissions (tons) O The outcome cannot be determined without more information Orms will continue to polute until the marginal benefit to them is $200 O firms will continue to pollute until the marginal benate to them is zero. O the quantity of pollution will be optimal.
4. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the well-being of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is beneficial, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Shift one of the curves to reflect the presence of the externality. If there are external costs of production, then you should shift the supply curve to reflect the social costs of producing the good; similarly, if there are external benefits from production, then you should shift the demand curve to reflect the social benefits from consuming the good. PRICE (Dollars per unit) QUANTITY (Units) Supply Demand O Demand -- Supply ? With this type of externality, in the absence of government intervention,…
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8. The Canadian National Advisory Committee on Immunization (NACI) recommended against vaccinating the whole population against the smallpox virus because the vaccination has undesirable, and sometimes fatal, side effects. Suppose the accompanying table gives the data that are available about the effects of a smallpox vaccination program. Percent of population vaccinated 0% 10 20 30 40 50 60 Deaths due to smallpox 200 180 160 140 120 100 80 Deaths due to vaccination side effects 0 4 10 18 33 50 74 a. Calculate the marginal benefit (in terms of lives saved) and the marginal cost (in terms of lives lost) of each 10% increment of smallpox vaccination. Calculate the net increase in human lives for each 10% increment in population vaccinated. b. Using marginal analysis, determine the optimal percentage of the population that should be vaccinated.
How can high-income countries benefit from covering much of the cost of reducing pollution created by low-income countries?
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