1. (75 points) The Government of Punjab wants to regulate Sulphur Dioxide (SO2) emissions in the province. The government hires students of ECON 244Introduction to Environmental Economics at LUMS to calculate the costs of various policies to regulate SO2 emissions. The budding students come up with the following estimates of the aggregate marginal abatement cost and the marginal damage functions associated with SO2 emissions in Punjab: C' = 200004 D' = 30000 where the marginal abatement cost (C') and the marginal damage of SO2 emissions are measured in Rs/ton/year, Q4 is the quantity of emissions abated, and Q is the quantity of emissions. Currently, the unregulated amount of SO2 emissions is 10 tons/year. a. (5 points) What is the economically efficient level of SO2 emissions? b. (5 points) What is the total abatement cost at this level under a command-and-control policy? c. (5 points) What is the total abatement cost at this level under an emissions tax policy? d. (5 points) What is the total damage at this level under a command-and-control policy? e. (5 points) What is the total damage at this level under an emissions tax policy? f. (5 points) What is the total tax burden at this level under a command-and-control policy? g. (5 points) What is the total tax burden at this level under an emissions tax policy? h. (5 points) What is the difference in the total costs (abatement, damages, and tax) at this level between a command-and-control policy and an emissions tax policy? The budding ECON 244 students argue that the total damages at the economically efficient level are too high and that the level of emissions should be further reduced by 2 tons/year. a. (5 points) What is the total abatement cost at this level under a command-and-control policy? b. (5 points) What is the total abatement cost at this level under an emissions tax policy? c. (5 points) What is the total damage at this level under a command-and-control policy? d. (5 points) What is the total damage at this level under an emissions tax policy? 1 e. (5 points) What is the total tax burden at this level under a command-and-control policy? f. (5 points) What is the total tax burden at this level under an emissions tax policy? g. (5 points) What is the difference in total costs (abatement, damages, and tax burden) at this level between a command-and-control policy and an emissions tax policy? 1. (75 points) The Government of Punjab wants to regulate Sulphur Dioxide (SO2) emissions in the province. The government hires students of ECON 244Introduction to Environmental Economics at LUMS to calculate the costs of various policies to regulate SO2 emissions. The budding students come up with the following estimates of the aggregate marginal abatement cost and the marginal damage functions associated with SO2 emissions in Punjab: C' = 200004 D' = 30000 where the marginal abatement cost (C') and the marginal damage of SO2 emissions are measured in Rs/ton/year, Q4 is the quantity of emissions abated, and Q is the quantity of emissions. Currently, the unregulated amount of SO2 emissions is 10 tons/year. a. (5 points) What is the economically efficient level of SO2 emissions? b. (5 points) What is the total abatement cost at this level under a command-and-control policy? c. (5 points) What is the total abatement cost at this level under an emissions tax policy? d. (5 points) What is the total damage at this level under a command-and-control policy? e. (5 points) What is the total damage at this level under an emissions tax policy? f. (5 points) What is the total tax burden at this level under a command-and-control policy? g. (5 points) What is the total tax burden at this level under an emissions tax policy? h. (5 points) What is the difference in the total costs (abatement, damages, and tax) at this level between a command-and-control policy and an emissions tax policy? The budding ECON 244 students argue that the total damages at the economically efficient level are too high and that the level of emissions should be further reduced by 2 tons/year. a. (5 points) What is the total abatement cost at this level under a command-and-control policy? b. (5 points) What is the total abatement cost at this level under an emissions tax policy? c. (5 points) What is the total damage at this level under a command-and-control policy? d. (5 points) What is the total damage at this level under an emissions tax policy? 1 e. (5 points) What is the total tax burden at this level under a command-and-control policy? f. (5 points) What is the total tax burden at this level under an emissions tax policy? g. (5 points) What is the difference in total costs (abatement, damages, and tax burden) at this level between a command-and-control policy and an emissions tax policy
