Based on your answer to part (a), is there an economic incentive for the sources to participate in the trading program? Explain briefly.
Suppose two point sources are discharging phosphorus into Wisconsin’sFox River and face the following abatement costs for this pollutant:
Point Source 1: TAC1 = 500 + 0.35(A1)2
MAC1 = 0.7A1
Point Source 2: TAC2 = 750 + 1.05(A2)2
MAC2 = 2.1A2,
where A1 and A2 represent the abatement of phosphorus effluents in pounds by Source 1 and Source 2, respectively, and TAC and MAC are measured in hundreds of dollars.
Assume that the state environmental authority has set the total maximum daily load (TMDL) for the Fox River. To achieve this limit, 40 pounds of phosphorus must be abated across the two point sources. Use this information to answer the following questions.
With a uniform abatement standard, the MAC values are unequal across the two sources, which means that the outcome is not cost-effective. Therefore, cost savings could be realized by changing this abatement allocation through the use of a trading program. Because the value of MAC1 is lower than the value of MAC2, Point Source 1 should do more of the abating, and Point Source 2 should abate less.
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When a product benefits people other than the buyer of the product, the product is said to have
A) an external cost. B) an excludable cost. C) an external benefit. D) an excludable benefit. E) a subsidized benefit.
What does job lock mean?
A. A tendency for workers to remain in their jobs to keep their insurance coverage B. A job where a time clock is used C. A job that provides insurance coverage only after several years of employment D. all of these answer options are correct.
Which of the following statements is true?
A. When the forces of supply and demand determine for whom goods are produced in a society, an equitable distribution of income will naturally result. B. An external benefit will occur when a third party enjoys some of the benefits derived from production of some good or service. C. One of the roles of the United States government is to provide a job to any able-bodied person who wants a job. D. The price mechanism will work well if there are at least two companies that are competing against each other.
The owner of a health club asks you for advice about whether the company should raise or lower the price of its membership this year based on the following information: last year the club raised the price of its membership by 5% and the number of
members paying the same fee fell by 7%. Please provide the best answer for the statement.