Question :
71.RefertoFigure10-16.Thisgraphshowsthemarketforpollutionwhenpermitsareissuedtofirmsandtradedinthemarketplace.Theequilibriumpriceofpollutionis
a.$50
b.$500
c.$1,000
: 1261397
71.RefertoFigure10-16.Thisgraphshowsthemarketforpollutionwhenpermitsareissuedtofirmsandtradedinthemarketplace.Theequilibriumpriceofpollutionis
a.$50
b.$500
c.$1,000
d.$2,000
72.RefertoFigure10-16.Thisgraphshowsthemarketforpollutionwhenpermitsareissuedtofirmsandtradedinthemarketplace.Theequilibriumnumberofpermitsis
a.50
b.100
c.1,000
d.2,000
73.RefertoFigure10-16.Thisgraphshowsthemarketforpollutionwhenpermitsareissuedtofirmsandtradedinthemarketplace.Intheabsenceofapollutionpermitsystem,thequantityofpollutionwouldbe
a.25
b.50
c.75
d.100
74.Twofirms,AandB,eachcurrentlyemit100tonsofchemicalsintotheair.Thegovernmenthasdecidedtoreducethe pollutionand fromnowon willrequirea pollutionpermitfor eachtonof pollutionemittedinto theair.Thegovernmentgiveseachfirm40pollutionpermits,whichitcaneitheruseorselltotheotherfirm.ItcostsFirmA$200foreachtonofpollutionthatiteliminatesbeforeitisemittedintotheair,anditcostsFirmB$100foreachtonofpollutionthatiteliminatesbeforeitisemittedintotheair.Afterthetwofirmsbuyorsellpollutionpermitsfromeachother,wewouldexpectthatFirmAwillemit
a.20 fewertonsof pollutioninto theair,and FirmBwill emit100fewer tonsofpollution intotheair.
b.100 fewertonsof pollutioninto theair,and FirmBwill emit20fewer tonsofpollution intotheair.
c.50 fewertons ofpollution intothe air,and FirmBwill emit50 fewertons ofpollution intotheair.
d.20more tonsof pollution intothe air,and Firm Bwill emit 100fewer tonsof pollution intothe air.
75.Twofirms,AandB,eachcurrentlyemit100tonsofchemicalsintotheair.Thegovernmenthasdecidedtoreducethe pollutionand fromnowon willrequirea pollutionpermitfor eachtonof pollutionemittedinto theair.Thegovernmentgiveseachfirm40pollutionpermits,whichitcaneitheruseorselltotheotherfirm.ItcostsFirmA$200foreachtonofpollutionthatiteliminatesbeforeitisemittedintotheair,anditcostsFirmB$100foreachtonof pollutionthatiteliminates beforeitisemittedinto theair.Itis likelythat
a.FirmAwillbuyallofFirmB’spollutionpermits.Eachonewillcostbetween$100and$200.
b.FirmBwillbuyallofFirmA’spollutionpermits.Eachonewillcostbetween$100and$200.
c.Bothfirmswillusetheirownpollutionpermits.
d.FirmAwillbuysomeofFirmB’spollutionpermits.Eachonewillcostlessthan$100.
76.Twofirms,AandB,eachcurrentlydump50tonsofchemicalsintothelocalriver.Thegovernmenthasdecidedtoreducethepollutionandfromnowonwillrequireapollutionpermitforeachtonofpollutiondumpedintotheriver.ItcostsFirmA$100foreachtonofpollutionthatiteliminatesbeforeitreachestheriver,anditcostsFirmB$50foreachtonofpollutionthatiteliminatesbeforeitreachestheriver.Thegovernmentgiveseachfirm20pollutionpermits.Governmentofficialsarenotsurewhethertoallowthefirmstobuyorsellthepollutionpermitstoeachother.Whatisthetotalcostofreducingpollutioniffirmsarenotallowedto buyand sellpollutionpermits fromeachother?Whatisthetotalcostofreducingpollutionifthefirmsareallowedtobuyandsellpermitsfromeachother?
a.$3,000;$1,500
b.$4,500;$3,500
c.$4,500;$4,000
d.$4,500;$2,500
77.Twofirms,AandB,eachcurrentlydump20tonsofchemicalsintothelocalriver.Thegovernmenthasdecidedtoreducethepollutionandfromnowonwillrequireapollutionpermitforeachtonofpollutiondumpedintotheriver.Thegovernmentgiveseachfirm10pollutionpermits,whichitcaneitheruseorselltotheotherfirm.ItcostsFirmA$100foreachtonofpollutionthatiteliminatesbeforeitreachestheriver,anditcostsFirmB$50foreachtonofpollutionthatiteliminatesbeforeitreachestheriver.Afterthetwofirmsbuyorsellpollutionpermitsfromeachother,wewouldexpectthat
a.FirmAwillnolongerpollute,andFirmBwillnotreduceitspollutionatall.
b.FirmBwillnolongerpollute,andFirmAwillnotreduceitspollutionatall.
c.FirmAwilldump10tonsofpollutionintotheriver,andFirmBwilldump10tonsofpollutionintotheriver.
d.Firm A will increase itspollution and Firm B willreduce its pollution.
78.Twofirms,AandB,eachcurrentlydump50tonsofchemicalsintothelocalriver.Thegovernmenthasdecidedtoreducethepollutionandfromnowonwillrequireapollutionpermitforeachtonofpollutiondumpedintotheriver.Thegovernmentwillsell40pollutionpermitsfor$75each.ItcostsFirmA$100foreachtonofpollutionthatiteliminatesbeforeitreachestheriver,anditcostsFirmB$50foreachtonofpollutionthatiteliminatesbeforeitreachestheriver.Neitherfirmproducesanylessoutput,buttheybothconformtothelaw.Itislikelythatbetweenthecostofpermitsandthecostofadditionalpollutionabatement,
a.Firm B willspend $3,500.
b.Firm Awill spend$4,000.
c.Firm Awill spend$4,500.
d.Firm B willspend $3,000.
79.Whichofthefollowingrequirefirmstopaytopollute?
a.(i)only
b.both(i)and(ii)
c.(iii)only
d.both(ii)and(iii)
Figure10-17
80.RefertoFigure10-17.Howlargewouldacorrectivetaxneedtobetomovethismarketfromtheequilibriumoutcometothesocially-optimaloutcome?
a.AnamountequaltoP’minusP.
b.AnamountequaltoP’.
c.AnamountequaltoP.
d.Anamountequaltotheexternalcost.
Table10-5
Thefollowingtableshowsthemarginalcostsforeachoffourfirms(A,B,C,andD)toeliminateunitsofpollutionfromtheirproductionprocesses.Forexample,forFirmAtoeliminateoneunitofpollution,itwouldcost$54,andfor Firm Ato eliminatea secondunit ofpollution itwould costan additional$67.
Firm
Unittobeeliminated
A
B
C
D
Firstunit
54
57
54
62
Secondunit
67
68
66
73
Thirdunit
82
86
82
91
Fourthunit
107
108
107
111