Using Scenario 1 calculate the total cost of pollution when both steel companies are allowed to pollute only one million gallons of thermal water each but the rights to pollute are genuine property rights sanctioned and protected by the government
and therefore tradable.
The old plant will be willing to pay the new plant for its rights to pollute up to 25 cents per gallon and the new plant is willing to sell his right for at least 5 cents per gallon. The old plant is willing to pay $250,000 for the right to pollute a million gallons of thermal water because that would be how much it would cost to cool down the water before discharging it. Therefore, the new plant will now clean up five million gallons of water at a cost of $250,000 and the old plant will clean up three million gallons of water at a cost of $750,000 . The combined cost of the cleanup will be $1,000,000, which is $200,000 cheaper than the case where the right to pollute was not tradable.
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Which of the following events could result in the consumption function shifting from CF0 to CF2?
A) an increase in disposable income B) an increase in expected future income C) a decrease in wealth D) a decrease in the real interest rate E) a decrease in disposable income The figure above shows two aggregate expenditure lines.
If you have a policy with 20 percent co-insurance, your insurer will pay ___ percent of your bill, leaving ___ percent for you.
A. 80; 20 B. 70; 30 C. 75; 25 D. None of the above is correct.
A major difference between tariffs and import quotas is that
a. tariffs create deadweight losses, but import quotas do not. b. tariffs help domestic consumers, and import quotas help domestic producers. c. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. d. All of the above are correct.