Imagine a firm with a marginal abatement cost (MAC) function equal to: MAC = 12-2E. The government offers a $4 per-unit subsidy for abatement. In principle, the firm could ignore the subsidy and continue to emit as many emissions as it was in the absence of government intervention, but there is money to be made from cutting back its emissions. Compared to ignoring the subsidy, how much money could a cost-minimizing firm save or make by cutting back its emissions? (Hint: remember that firms trade off the benefits of the subsidy with the costs of abatement when deciding how much to abate) Answer:

Imagine a firm with a marginal abatement cost (MAC) function equal to: MAC = 12-2E. The government offers a $4 per-unit subsidy for abatement. In principle, the firm could ignore the subsidy and continue to emit as many emissions as it was in the absence of government intervention, but there is money to be made from cutting back its emissions. Compared to ignoring the subsidy, how much money could a cost-minimizing firm save or make by cutting back its emissions? (Hint: remember that firms trade off the benefits of the subsidy with the costs of abatement when deciding how much to abate) Answer:

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 17SQ

See similar textbooks

Similar questions

Consider the following graph that shows the marginal abatement cost (MAC) curve for a coal power plan for reducing local air pollution and the marginal damage (MD) curve for those living around the coal power plant. MD (E) MAC (E b. Emissions E-0 E EL E-Max AMax Or Abatement E A-0 What are the total abatement costs at E' (enter your answer with the letters and "+" signs as "a+b+c+d+e+f", without the quotation marks. What are the total abatement costs at E-0 (enter your answer with the letters and "+" signs as as "a+b+c+d+c+f", without the quotation marks. If the property rights were with the coal power plant how much Emissions would we see? (enter one of the following, "E-0", "E", "E1", "E-Max") If the property rights were with the people how much Emissions would we see? (enter one of the following. "E-0", "E", "E1 "E-Max") What is the socially optimal level of emissions (choose from one of the following and enter as written without the quotation marks, "E-0". "E"E1 "E-Max").
The firm in the graph below faces a tax t for each unit of emissions that it releases. $ Marginal abatement cost 干し a b. What is the: i. total tax bill b Emissions a. Clearly mark in the graph the firm's choice of emissions when it faces the tax t.
cap-and-trade and windfall profitsA city called Seoul is suffering from high concentrations of mercury in the air, caused by burningcoal in power plants. There are two of these plants close to the city. The city’s mayor wants touse cap-and-trade to reduce emissions to a reportedly “safe” level of 60 tons. The two firms havethe following marginal benefits of emissions: MB1 = 100 – 2e1, MB2 = 25 – 0.5e2.a. How much mercury will each firm emit? What allowance price will prevail in themarket?Firm 2 hires a smart lobbyist who convinces the government that its profits are relatively low andthat it therefore deserves a generous allowance allocation. The government agrees and allocatesa1 = 20 allowances to firm 1 (for free) and a2 = 40 allowances to firm 2 (for free).b. What are the firms’ profits? Do any of the firms earn windfall profits? [Hint: compareprofits with and without regulation.] Windfall profits have been sharply criticized by consumer advocacy groups and politicians.c. What can…
Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 100 – 2E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 50 – E. If the government raises the tax on emissions from $4 to $12, the benefits of adopting the new technologies increase by $____
Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 24 – 2E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 12 – E. The adoption costs for the new technology are $2. If the government raises the tax on emissions from $2 to $4, the firm's total costs increase by $_____. Select one: a. $19. b. $15. c. $16. d. $21. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
The firm in the graph below faces a tax t for each unit of emissions that it releases. Marginal abatement cost $ t a b →Emissions a. Clearly mark in the graph the firm's choice of emissions when it faces the tax t. b. What is the: i. total tax bill ii. total abatement costs iii. total compliance costs when it faces the tax f.
Only typed answer and please don't use chatgpt The inverse demand for leather is given by P = 50-0.5Q. The industry supply of leather is determined by its marginal cost: MC = 0.4Q. Unfortunately, the production of leather causes noxious chemical residue to leach into groundwater supplies. The external marginal cost caused by these residues grows with the amount of output, and is measured as EMC = 0.05Q. 1A. How many leather is produced in the free market if the externality is not corrected. B) What is the free market price of the leather if the externality is not corrected? C) What is the social marginal cost?
1. The graph below illustrates the marginal abatement cost curve for a firm's carbon dioxide emissions. T° MAC A B E E₁ Carbon Dioxide Suppose that the EPA imposes an emissions tax with a per-unit charge of T* on carbon dioxide emissions. Which of the following statements are true? (Check each that is true) The tax bill to the firm will be given by the area A + B. The firm will choose to reduce emissions by (Eo - E*) units. Total abatement costs to the firm are equal to T*. Total abatement costs plus the tax bill to the firm is given by the area B + C. The firm will prefer a performance standard of E* units over this emissions tax policy.
Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 18 – 2E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 9 – E. With a tax on emissions of $4, the benefits of adopting the new technologies are $____
Suppose that a firm’s emissions and Marginal Abatement Cost (MAC) data are summarized in thetable below. e MAC 0 200 10 180 20 160 30 140 40 120 50 100 60 80 70 60 80 40 90 20 100 0 a. If the price of a pollution permit is $100, how many permits will the firm need? Explain.b. Suppose that the price of a pollution permit increases to $120, how many permits will thefirm need? Explain.c. With this new price of $120, will the firm’s emissions increase or decrease? By howmuch? Explain.d. Can the firm sell any permits? If so, what is the revenue generated from permit sales?Explain.
Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 12 – E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 6 – 0.5E. The adoption costs for the new technology are $6. If the government raises the tax on emissions from $2 to $4, the firm's total costs increase by $_____. HINT: Total costs include tax payments, total abatement costs, and (if relevant) adoption costs for the new technology. Select one: a. $12. b. $8. c. $10. d. $16.
Imagine a firm's marginal abatement cost function with existing technologies is: MAC = 150 – 6E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 75 – 3E. If the government raises the tax on emissions from $12 to $24, the benefits of adopting the new technologies increase by $_. Select one: a. $6. b. $24. c. $12. d. $36.