Question
In: Economics
There are three industrial firms in Happy Valley Firm Initial Pollution Level Cost of Reducing Pollution...
There are three industrial firms in Happy Valley
Firm Initial Pollution Level Cost of Reducing Pollution by 1 Unit
A 30 units $20
B 40 units $30
C 20 units $10
The government wants to reduce pollution to 60 units, so it gives each firm 20 tradable pollution permits.
a. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation?
b. How much higher would the costs of pollution reduction be if the permits could not be traded?
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
There are three industrial firms in Happy Valley. Firm Initial Pollution Cost of Reducing Level Pollution...
There are three industrial firms in Happy Valley. Firm Initial
Pollution Cost of Reducing Level Pollution by 1 Unit
_______________________________________________________ A 100 units
$60 B 80 units $50 C 60 units $40 The government wants to reduce
pollution to 150 units, so it gives each firm 50 tradable pollution
permits. Each permit allows for 1 unit of pollution. a. Who sells
permits and how many do they sell? Who buys permits and how many do
they buy? Briefly explain why...
There are 3 industrial firms in Happy Valley: Firm Initial Pollution Level Cost of Reducing Pollution...
There are 3 industrial firms in Happy Valley:
Firm
Initial Pollution Level
Cost of Reducing Pollution by 1 Unit
A
70 units
$30
B
60 units
$10
C
80 units
$50
The government wants to reduce pollution to 150 units and gives
each firm 50 pollution permits.
What is the total cost of pollution abatement if the permits are
not tradable?
What is the total cost of pollution abatement if the permits are
traded at a
price of $20 each?
There are 3 industrial firms in Happy Valley: Firm Initial Pollution Level Cost of Reducing Pollution...
There are 3 industrial firms in Happy Valley:
Firm
Initial Pollution Level
Cost of Reducing Pollution by 1 Unit
A
70 units
$30
B
60 units
$10
C
80 units
$50
The government wants to reduce pollution to 150 units and gives
each firm 50 pollution permits.
What is the total cost of pollution abatement if the permits are
not tradable?
What is the total cost of pollution abatement if the permits are
traded at a
price of $20 each?
There are 3 industrial firms in Happy Valley: Firm Initial Pollution Level Cost of Reducing Pollution...
There are 3 industrial firms in Happy Valley:
Firm
Initial Pollution Level
Cost of Reducing Pollution by 1 Unit
A
70 units
$30
B
60 units
$10
C
80 units
$50
The government wants to reduce pollution to 150 units and gives
each firm 50 pollution permits.
What is the total cost of pollution abatement if the permits are
not tradable?
What is the total cost of pollution abatement if the permits are
traded at a
price of $20 each?
Use the following data to answer questions 1-3: There are three industrial firms in Happy Valley:...
Use the following data to answer questions 1-3:
There are three industrial firms in Happy Valley:
Firm A Pollution Level
= 70 units Cost to Reduce Pollution = $20 /
Unit
Firm B Pollution Level
= 80 units Cost to Reduce Pollution = $25 /
Unit
Firm C Pollution Level
= 50 units Cost to Reduce Pollution = $10 /
Unit
The government is considering options to reduce the pollution level
to 90 total units. Suppose they decide to impose...
Firm A: initial pollution level = 120, cost to reduce pollution 1 unit = $75 Firm...
Firm A: initial pollution level = 120, cost to reduce
pollution 1 unit = $75
Firm B: initial pollution level = 150, cost to reduce
pollution 1 unit = $100
a. Assume that the government decides to cut pollution by 1/3,
telling firms that “Starting next year, you will only be permitted
to emit 2/3 as much pollution as you currently do.” What is the
cost for each firm under this policy?
b. Suppose instead that the government issued permits...
Industrial standards and methods followed for reducing air pollution
Industrial standards and methods followed for reducing air
pollution
Suppose the government wants to reduce the total pollution emitted by three firms. Currently, each firm...
Suppose the government wants to reduce the total pollution
emitted by three firms. Currently, each firm is creating 4 tons of
pollution, for a total of 12 tons. The government is considering
the following two methods to reduce total pollution to 6 tons:
1.
The government sets regulation specifying that each of the
three firms must cut its pollution in half.
2.
The government allocates two tradable pollution permits to each
of the three firms. Each permit allows the firm...
Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units.
Correcting for negative externalities - Regulation
versus tradablepermitsSuppose the government wants to reduce the total pollution
emitted by three local firms. Currently, each firm is creating 4
units of pollution in the area, for a total of 12 pollution units.
If the government wants to reduce total pollution in the area to 6
units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm...
Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units.
5. Correcting for negative externalities - Regulation
versus tradable permitsSuppose the government wants to reduce the total pollution
emitted by three local firms. Currently, each firm is creating 4
units of pollution in the area, for a total of 12 pollution units.
If the government wants to reduce total pollution in the area to 6
units, it can choose between the following two methods:Available Methods to Reduce Pollution1.The government sets pollution standards using regulation.2.The government allocates tradable pollution permits.Each firm...
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