Tax is the efficient method of abating pollution

Assignment Help Business Economics
Reference no: EM131097243

Per the Kyoto Protocol, European countries have targeted a reduction of CO2 emissions. There are two main types of coal-fire plants in the EU: one type is designed to be able to be retrofitted with abatement equipment at a lower cost than the other type. The EU government has given its economists the job of figuring out the least costly way to reach the goal of reducing pollution by 120 tons of CO2 this year. The marginal abatement costs for each type of plant are as follows: Type 1: MC1 = 5q1 Type 2: MC2 = 3q2 where q1 is the total tons of CO2 removed by type 1 plants where q2 is the total tons of CO2 removed by type 2 plants The EU implements an emissions tax.

a. Find the tax per ton of carbon that would allow the EU's target to be reached at the lowest cost.

b. Draw the graph and label the tax. Using one of the firms as an example, explain the process by which economic incentives move the firms to the efficient q of abatement.

c. Using your calculations from #1 and additional calculations here, show that the using the tax is the efficient method of abating pollution.

Reference no: EM131097243

Questions Cloud

Second-hand smoke : "Second-hand" smoke, an often cited disadvantage of allowing smoking in restaurants, is referred to in economics as a(n)
Tariffs or quotas should be imposed on imported goods : Participate in a discussion with your classmates by describing the role international trade plays in your life. Review the “EYE on YOUR LIFE” caption titled “International Trade” on page 235 in the textbook. As a voter, describe your concerns regardi..
Determine the stackelberg equilibrium : Determine the Stackelberg equilibrium with 1 leader firm and n follower firms if the market demand curve is linear and each firm faces a constant marginal cost, m, and no fixed cost.
What does the taylor rule imply that policymakers should do : What does the Taylor rule imply that policymakers should do to the fed funds rate under the following scenarios?
Tax is the efficient method of abating pollution : Per the Kyoto Protocol, European countries have targeted a reduction of CO2 emissions. There are two main types of coal-fire plants in the EU: one type is designed to be able to be retrofitted with abatement equipment at a lower cost than the other t..
The annual depreciation worked out : On January 1, 20X1, Robust Inc. purchased heavy-duty equipment for $400,000. On the date of installation, it was estimated that the machine has a useful life of 10 years and a residual value of $40,000.
What are the implications of these trends : What are the implications of these trends for managerial decision making in the copper industry?
Available on dollar-denominated bonds : Exchange Rate Effects Katina, Inc., is a U.S. firm that plans to finance with bonds denominated in euros to obtain a lower interest rate than is available on dollar-denominated bonds. What is the most critical point in time when the exchange rate ..
The requirements to elect s corporation status : 1)In 2014, Tony and Rhonda acquired land for $600,000, with Tony furnishing $200,000 and Rhonda $400,000 of the purchase price. Title to the property is listed as equal joint tenancy with right of survivorship.

Reviews

Write a Review

 

Business Economics Questions & Answers

  In economy with income taxes

In an economy with income taxes, if the marginal propensity to consume were 0.8, the tax rate on income were 0.2, and the marginal propensity to import were zero: (a) How large an increase in government spending (with no change in taxes) would be req..

  What is the future value of the total revenue

A major defence supplier expects to generate additional revenue from its recently won government contract. The company expects the revenue will be $110 million in the first year and the revenue increasing by $2.5 million each year for the next 4 year..

  Illustrate the graph for a natural monopoly

Illustrate the graph for a natural monopoly. Where is price efficiency on the graph? Describe three consequences of price efficiency.

  1 discuss the pros and cons of central banks setting policy

1. discuss the pros and cons of central banks setting policy based on rules as opposed to setting policy based upon the

  Analyze a situation in which both parties entering

Please respond to the following: From the e- Activity, propose a methodology for assessing the risk in business contracts. Assess the economic impact this methodology may have for the organization.

  Congress decides to reduce the tax paid per pack paid

If congress decides to reduce the tax paid per pack paid by sellers of cigarettes other things being equal the cost of cigarettes will fall.

  Knowledge of the price elasticity of demand

Consider the following: “In 1973 several major oil producing countries formed a cartel. The cartel effectively decreased the supply of crude oil. Gasoline prices rose sharply as did the total expenditures on gasoline.” Use a supply/demand diagram of ..

  Real interest rates and real exchange rates are constant

The real interest rates and real exchange rates are constant and equal in North Country and South Country. The Fisher equation and purchasing-power parity hold in both countries. If the nominal interest rate is 8 percent in North Country and 10 perce..

  Technology based-quality based or cost based

Success of a company investing and operating in a foreign country depends on the competitive advantage of the company. The entry strategy could be technology based, quality based, or cost based. Explain and comment.

  Assume that skilled wages are twice that of unskilled wages

Assume that skilled wages are twice that of unskilled wages, and that half of the population fits into each category, skilled and unskilled. Graph the Lorenz curve and calculate the gini coefficient.

  Explain how global economic competition impact price

Explain how does global economic competition impact price elasticity in domestic market and decisions related to strategy a firm uses to compete.

  Literature review and research proposal

You will receive in class feedback that should then be used to develop and inform your end of semester 3000 word research proposal.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd