Discuss the similarities and differences between “Cap and Trade” and a “Pigou Tax” as they apply to correcting for externalities. Focus on how each affects the price paid by consumers, the price received by producers, and the amount of revenue received by the government. Also discuss the potential problems with achieving the efficient outcome under each system.
What will be an ideal response?
If the systems are able to completely correct for the externality, then each will lead to the same price being paid by consumers as well as the same price being received by producers since each system results in the efficient quantity being produced and sold. If the government charges for the permits under Cap and Trade, then the both systems will also generate the same level of government revenue. The main problem with each system is being able to peg what the actual level of the inefficiency is. Under the Pigou Tax, the government must be able to calculate the level of the externality per unit of output which may be difficult in the real world. Under Cap and Trade, the government must issue the exact right number of permits in order to achieve efficiency which once again, may be difficult in the real world.
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Luke purchases a $50,000 face value one-year Treasury bill for $46,296.30, and the next day investors decide they will only buy one-year Treasury bills if they receive an interest rate of 4%
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The question of reliability/unreliability of a multiple regression depends on
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The figure supports all of the following statements regarding the marginal factor cost curve for a monopsonist EXCEPT
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