Use marginal cost/marginal benefit analysis to determine if the following statement is true or false: “The optimal amount of pollution abatement for some substances, say, dirty water from storm drains, is very low; the optimal amount of abatement for other substances, say, cyanide poison, is close to 100 percent
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Use marginal cost/marginal benefit analysis to determine if the following statement is true or false: “The optimal amount of pollution abatement for some substances, say, dirty water from storm drains, is very low; the optimal amount of abatement for other substances, say, cyanide poison, is close to 100 percent
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- Q) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Explain it early. Not solve in excel worksQ) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Solve it early. Not in excelQ) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Correctly explain now. Not in excel
- A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. The table below shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. Emissions Total Cost Marginal Cost Total Benefit Marginal Benefit 16 MG Current N/A Current N/A 12 MG 50 800 8 MG 150 1300 4 MG 500 1650 0 MG 1200 1950 Complete the table. What is the optimal level of sewage for this city? How can you tell?Plants A and B emit 12 tons and 6 tons of carbon dioxide (CO2), respectively. MAC(marginal abatement costs) for a = 12 - Ea, MACb=12-2Eb MD(marginal damage) = 1/3*E (E indicates CO2 emission) What is the social optimum for power plants A and B to reduce CO2 by some amount, and how much reduction cost each power plant bears?Please drag and drop the markers 1 through 5 below to denote the appropriate position on the diagram that answers the question. a) Show with marker 1 the efficient level of marginal abatement costs. b) Show with marker 2 the marginal abatement costs if each produce must reduce pollution to 7.5 units. c) Denote with marker 3 the area that measures total abatement costs for each polluter. d) Show with marker 4 the marginal abatement costs if sources 1 and 2 merged and were constrained to a maximum total emissions of 15 units. e) Show with marker 5 the total abatement costs if both sources merged and were constrained to a maximum total emissions of 15 units. Marginal Cost (in dollars) MC MC, Quantity of Emissions Reduced A Source 1 10 5 4 13 14 15 15 14 13 12 11 10 8 O Source 2 5
- The “demand” (MB) curve for pollution abatement would be given by the pollution damages that could be avoided by each successive unit of abatement. There are likely to be declining marginal benefits from each additional unit of abatement. The marginal cost of abatement is likely to start small, and then grow, yielding increasing marginal abatement costs from each additional unit of abatement. The socially efficient amount of abatement would be given by the intersection of the falling marginal benefit (avoided damages) curve and the rising marginal abatement cost curve. However, unregulated firms can often simply ignore the damages caused by the pollution they create. a. Illustrate the marginal private benefit curve, as perceived by the firm, if they don’t have to think about their pollution at all, and show the firm’s privately efficient amount of abatement. b. If the regulatory agency sets a standard for expected levels of abatement, and charges the firm a huge fine per unit if…Suppose the marginal cost of pollution abatement is constant and equal to 10 percent of GDP for each 10 percent increase in pollution control Given the following data for a $10 trillion economy, answer two questions, Level of Pollution Abatement (%) 0 (no pollution control) 10 20 30 40 50 60 70 80 90 100 (zero emissions) Marginal Benefit ($ trillions) 2.0 1.7 1.3 1.0 08 06 04 03 02 0.1 Instructions: Enter your responses based on the percentage values provided in the table a. Identify the optimal rate of pollution abatement Now suppose that the marginal costs of pollution abatement decrease to 6 percent of GDP for each 10 percent increase in pollution control because of improved pollution control technology and more efficient sources of renewable energy b. Identify the new optimal rate of pollution abatement %Suppose that speeding imposes externalities on other people resulting in a social cost of $50. A town is considering hiring an extra police officer to give out speeding tickets. If we want to maximize social welfare (absent enforcement costs), which of the following statements are true? (Assume risk neutral drivers.) What happens to the socially optimal cost of the speeding ticket if the town decides to hire the police officer? a) It goes down b) It goes up c) The amount that it goes down depends on salary of the police officer d) The amount if goes up depends on the salary of the police officer e) None of the above
- Use the model of environmental pollution to model the following changes in a polluting industry to: i) the socially optimal level of pollution; ii) the total abatement costs; and ii) the total damage costs (а) A new technology is invented that allows firms to reducе pollution associated with each level of production output. (b) The government announces a new commitnment to more strictly enforce current environmental regulations. (c) A new study finds the pollutant in question to be more carcinogenic than originally thought.A country is currently creating40 million tons of toxic waste per year. The table below shows the marginal costs and benefits of reducing the amount of toxic waste to various amounts. What level of toxic waste should the country reduce to?a) What is meant by Pareto efficiency in economics? Explain. b) List two examples of market failures that are relevant for environmental economics.