Calculate the elasticity of pollution demand, Microeconomics

Assignment Help:

1.  The marginal benefit (demand) curve for pollution for an industry is P=100-4*Q, where Q is emissions in tons.  The current emissions tax (price) for pollution is $40/ton.  Regulators are curious if a 10% decrease in the pollution tax will lead to a disproportionate percentage increase in emissions.  You calculate the elasticity of pollution demand and conclude (choose one): 

 a. Demand is elastic.  A reduction in the tax will lead to a disproportionately large increase in emissions. 

b. Demand is elastic.  A reduction in the tax will lead to a smaller than proportional increase in emissions.    

c. Demand is inelastic.  A reduction in the tax will lead to a disproportionately large increase in emissions. 

d. Demand is inelastic.  A reduction in the tax will lead to a smaller than proportional increase in emissions.


Related Discussions:- Calculate the elasticity of pollution demand

Profit, Profit: This is surplus left over after a company sells its output ...

Profit: This is surplus left over after a company sells its output and pays off cost of production (which includes raw materials, labour costs and a proportional share of its capit

Market structers, what are the majotr sources of monopoly

what are the majotr sources of monopoly

PPC help, I don''t understand PPC at all

I don''t understand PPC at all

Cost sharing in higher education - graduate tax, Cost Sharing in Higher Edu...

Cost Sharing in Higher Education - Graduate Tax Another commonly suggested measure is to tax the employers employing educated manpower. The case for this method is made on the

Explain three argument of promote trade, 1. "Price discrimination allows a ...

1. "Price discrimination allows a monopoly to increase its economic profit by capturing part of the consumer surplus and turning it into economic profit. Such a situation however l

Utility approach, Prove that utility approach and indifference curve yield ...

Prove that utility approach and indifference curve yield the same consumer equilibrium

Second Best, What is the theory of second best

What is the theory of second best

Introduction, b) Sally’s firm produces granola bars with a fixed cost of 10...

b) Sally’s firm produces granola bars with a fixed cost of 10 (this cost is already sunk). Her variable cost function is VC = q2 + 2q. Assuming the market for granola bars is comp

Endowendowment, How to solve questions of endowments?

How to solve questions of endowments?

Determine the fiscal policy, How might an accurate value for the multiplier...

How might an accurate value for the multiplier aid a government in setting fiscal policy? Any given multiplier will enhance national income at a given rate times enhance in gov

Write Your Message!

Captcha
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