1.Discussion Questions: Provide brief answers to the following questions.

(a)Let us assume that the cost to society of carbon dioxide emissions is 100 dollars per ton. If we introduced a carbon tax of 100 dollars per ton, how would you think about what influences who ends up paying this tax? Compare the efficiency impacts of raising the carbon tax from 0 to 1, as compared to raising the carbon tax from 99 to 100. Which is larger, or are they the same (and why)?

(b)A general principle in economics is that prices are determined by the intersection of supply and demand. Then why did we talk about situations arising whereby the supply curve pins down the price, and the demand curve pins down the quantity? Explain briefly.

(c)Discuss why a one-way airfare is often substantially more than 50% of a round-trip airfare.