Suppose the government decides to raise the gasoline tax as a way to reduce air pollution and traffic congestion to their optimal levels. Which of the following describes why corrective taxes, such as the gasoline tax, are unlike most other taxes? Other taxes get passed on from businesses to consumers, whereas corrective taxes do not. O Other taxes are typically used to cover general spending, but funds from corrective taxes can be used only to alleviate pollution. O Corrective taxes bring the allocation of resources closer to the social optimum and, thus, improve economic efficiency. O Corrective taxes alter incentives, whereas other taxes typically do not.
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- Explain how a government can use a tax on dry cleaning to bring about the efficient level of production. OA. The government can use a tax to decrease the marginal private benefit of consuming dry cleaning to equal the marginal social benefit. OB. The government can use a tax to decrease the marginal social cost of producing dry cleaning to equal the marginal private cost. OC. The government can use a tax to increase the marginal private cost of producing dry cleaning to equal the marginal social cost OD. The government can use a tax to increase the marginal private benefit of consuming dry cleaning to equal the marginal social benefit. OE. The government can use a tax to decrease the marginal private cost of producing dry cleaning to equal the marginal social cost What should the value of the tax be? The tax should be $ per unit (Enter your response rounded to two decimal places) How large is the deadweight loss (in dollars) from excessive dry cleaning, according to the figure? The…Suppose that you are an economic-policy advisor. Environmental groups are pressuring you toimplement the highest-possible carbon tax, whileindustry groups are pressuring you to implementno carbon tax at all. Both argue that their positionmakes more sense economically. Explain to themwhat the most-efficient tax level will be, and whythere are costs to setting the tax too high or toolowExternalities: End of Chapter Problem In Chapter 6, we said that taxes create deadweight losses. When we tax goods with external costs, should we worry about deadweight losses? Why or why not? Any deadweight losses O should not conern us. Deadweight losses are the result of transactions that no longer occur and the problem with negative externalities is that too many transactions occur. O should concern us. If there is a negative externality associated with a good, the deadweight loss from a tax simply exacerbates society's welfare costs. from a tax are counter-productive. Why would we tax goods with negative externalities when the remedy for a negative externality is a subsidy? should concern us. Deadweight losses sound bad because they are bad; we should always avoid deadweight losses.
- 1. A metropolis has only two seasons in a year, one hot and dry season and one warm and wet season. The respective water demand curves in the two seasons are: Demand dry = 1000 100 x Price Dry Show Transcribed Text Demandwet = 600 - 50 × Price Wet Show Transcribed Text The units of Demand and Price are million m³ and $/m³, respectively. The metropolis compares multiple water tariff schemes for achieving two goals of water conservation and affordability. Please calculate annual water consumption (million m³) and annual spending on water ($) (i.e., the sum of both seasons) for the following four water tariff schemes (10%). 1. Universal water tariff: = Price Dry J Price Wet Show Transcribed Text 3 Show Transcribed Text = $1/m³. 2. Seasonal water tariff: Price Dry Show Transcribed Text = $2/m³; Ć Price Wet Show Transcribed Text = $0.5/m³. 3. Progressive water tariff without differentiation between seasons:10. Understanding different policy options to correct for negativeexternalities Carbon dioxide emissions have been linked to degradation of air quality. The following table lists some potential regulations targeting the amount of airbome carbon dioxide. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. о Public Policy Command-and- Control Policy Tradable Permit System Corrective Subsidy Corrective Тах Trees take carbon dioxide out of the air and convert it to oxygen, so the govemment funds a tree-planting initiative by offering $440 to any citizen who plants a tree. 0 о The government charges factories $440 for every ton of carbon dioxide they emit о о The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. 0 ° ° о The government limits total carbon-dioxide emissions by all factories to 260,000 tons per ten years. Each…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…
- 1.Explain specifictly how to overcome and solve the major problem of Mcdonal's company from polluting the water? 2. Explain specifictly how to stop the staff from throwing unethically waste inside the water? 3. Explain what the company will do if the staff still throwing unethically waste in the water?2.Is the collection of emissions fees economically efficient in terms of cost effectiveness? How do manufacturers determine the amount of pollution reduction?. Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 – however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 – however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. If both states clean the lake, the payoffs will be A. Wisconsin gains 100, Illinois gains 200B. Wisconsin gains 200, Illinois gains 300C. Wisconsin gains 200, Illinois loses 100D. Wisconsin gains 100, Illinois loses 100
- Project Repair highways Build new highways Build a new bridge Build a new tunnel Expand existing airport Total Cost (in millions) $100 $100 $100 $100 $100 Total Benefit (in millions) $80 $90 $140 $115 $130 This table shows the costs and benefits for some new projects that a local government is considering. Based on these costs and benefits, which project should the government select? O Build new highways O Expand existing airport O Build a new bridge O Build a new tunnel O Repair highways4. Understanding different policy options to correct for negative externalities Carbon dioxide emissions have been linked to worsening climate conditions. The following table lists some possible public policies aimed at reducing the amount of carbon dioxide in the air. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Command- and- Tradable Control Permit Corrective Corrective Public Policy Policy System Subsidy Таx The government agrees to reimburse all factories that purchase new, emissions- reducing technology in order to provide cleaner air. The government limits total carbon-dioxide emissions by all factories to 160,000 tons per month. Each individual factory is given the right to emit 130 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. The government charges factories $340 for every ton of carbon dioxide they emit. The government orders…10. Understanding different policy options to correct for negativeexternalities Carbon dioxide emissions have been linked to increased air pollution. The following table lists some possible public policies aimed at reducing the amount of carbon dioxide in the air. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Tradable Command-and- Control Policy Permit Corrective Corrective Public Policy System Subsidy Tax The government agrees to reimburse all factories that purchase new, emissions-reducing technology in order to provide cleaner air. The government limits total carbon-dioxide emissions by all factories to 120,000 tons per decade. Each individual factory is given the right to emit 110 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. The government charges factories $400 for every ton of carbon dioxide they emit. The government orders every…