Suppose a society has the following marginal abatement cost (MAC) and marginal damage (MD) functions MAC...

Suppose a society has the following marginal abatement cost (MAC) and marginal damage (MD) functions MAC = 140 – 4E MD = 3E Where E denotes the level of pollution.

a) What is the unregulated level of pollution?

Expert Solution

Rahul Sunny answered 2 years ago

For the following questions assume: Marginal Abatement Cost is MAC= 12 – E, and Marginal Damages...

For the following questions assume: Marginal Abatement Cost is MAC= 12 – E, and Marginal Damages is MD = E/2 Suppose the same polluter is operating under a regulatory environment such that the polluter always choses ESE (so the regulation updates as polluters innovate). The firm has the option of undertaking a technological innovation in abatement such that it would face MAC = 6 – E/2 after implementation. 9) What is the incentive to innovate (the net private benefit to...

What must be true about the relationship between marginal abatement cost and marginal damage cost to...

What must be true about the relationship between marginal abatement cost and marginal damage cost to achieve the efficient level of pollution? While the efficient level can be defined in principle, why might policy instruments to obtain the efficient level be difficult to implement in practice?

Suppose the marginal damage and marginal benefi t curves in a pol-luted neighborhood are MD =...

Suppose the marginal damage and marginal benefi t curves in a pol-luted neighborhood are MD = P /3 and MB = 4 – P . Also, suppose that transactions costs are low, so that the neighborhood residents and the fi rm can bargain. We saw that in this case, the socially optimal level of pollution is achieved. Start by computing the socially optimal P . Then, for each of the following cases, compute the amount of money trans-ferred through the...

Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 8 – E....

Imagine a firm’s marginal abatement cost function with existing technologies is: MAC = 8 – E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 4 – 0.5E. With a tax on emissions of $2, the benefits of adopting the new technologies equal: Select one: a. $4. b. $10. c. $2. d. $8.

The marginal (external) damage cost from air pollutant emission is MD = 20 + Q where...

The marginal (external) damage cost from air pollutant emission is MD = 20 + Q where Q is the quantity units of pollutants emitted. The marginal control cost associated with pollution cleanup is MC = 200-5Q. (a) Draw the marginal damage cost and the marginal control cost together. (b) What is the optimal (or efficient) level of pollution emission? In other words, what is the optimal level of pollution reduction? (c) Compute the total damage cost and the total control...

a. Assume that a society is composed of two polluters, with the marginal abatement costs of...

a. Assume that a society is composed of two polluters, with the marginal abatement costs of polluters 1 and 2, respectively, equal to: MAC1 = 18 – E1 MAC2 = 12 – 2E2 Where MAC1 refers to the marginal abatement costs of polluter 1, and E1 refers to the level of emissions of polluter 1. What is the unregulated level of pollution for each polluter? Find the total level of emissions that would be generated if a per-unit pollution tax...

Suppose that a given firm has the following total cost and marginal cost functions: C(q) =...

Suppose that a given firm has the following total cost and marginal cost functions: C(q) = 50+5q+ 5q 2 , MC(q) = 5+10q. 2 (a) Write down expressions for the fixed cost, average fixed cost, average total cost and average variable cost associated with this production function. In addition, identify the quantity at which average total cost is minimized. (b) Consider the restaurant industry. Provide an example of a fixed cost, variable cost, and sunk cost. Be sure to justify...

14.Suppose that the marginal damages to society from air pollution are MD = 6+ 2e, where...

14.Suppose that the marginal damages to society from air pollution are MD = 6+ 2e, where e is the level of air pollution. Suppose also that the marginal cost of reducing the air pollution on the part of firms is MC = 150 - e. a. Find the optimal level of pollution. Illustrate graphically. b. Find the net gain to society, assuming firms were initially not controlling emissions at all. c. What level of tax would achieve the optimal level...

In this situation you have two firms that face separate marginal abatement cost functions of MAC1...

In this situation you have two firms that face separate marginal abatement cost functions of MAC1 = 6.5 and MAC1 = 4.5, where A is units of abatement that occur by a firm. Both companies can sell up to two units of output and each unit of output generates one unit of pollution. The price for each unit of output is $15.00 that yields a revenue of $30 dollars per period. Each company is required to hold a permit for...

Assume that you have two firms that face marginal abatement cost functions of ???1 = 4.5?...

Assume that you have two firms that face marginal abatement cost functions of ???1 = 4.5? and ???1 = 2.5?, where A is units of abatement undertaken by a firm. Both companies can sell up to two units of output and each unit of output generates one unit of pollution. The price for each unit of output is $12.00 that yields a revenue of $24 dollars per period. Each company is required to hold a permit for each unit of...

Question