please answer the questions, thanks

1 Question 3 18.67 / 140 pts Use the Graph below for the following Questions. Each Question is worth 10 points. It shows the Impact of tons of Effluent. Imagine it represents the environmental situation in a county where an Artisinal Ice Tea company (Artea) and a Paper mill (BigMill) both operate. Artea has been using a mountain lake as the source for their spring water-and BigMill's effluent is now impacting this. The graph illustrates through the Marginal Damage (MD) curve, the extra damage another ton of Effluent does to Artea business, and through the Marginal Abatement curve (MAC) how much it costs BigMill per ton to clean this up. All your answers should be based per day values. Each sub-question is worth 10 polnts. $,000 MD 24 Letter $,000 A 25 B 75 MAC 8 C 75 6 D 225 B E 900 C D 0 25 100 Tons Pollutant Discharge per month If we assume Big Mill is undertaking no pollution control: How many tons of effluent are they discharging per day1 tons per day What is the marginal damage of the last ton? $ 24,000 ,000 - no units What is the $ value of the total amount of damage this causes? $ 130,000 ,000 -- no units If we know Artea has full Property Rights to the lake and its use: Initially how many tons of effluent would BigMill be legally discharging per day? 25 tons per day What are Total Damage From Pollutant Costs? $ 6 no units What are Total Clean-up Costs? $ ,000 -- no units If we assume both parties will operate as suggested by the Coase theorem (negotiations are possible) which answer below explains what we would expect to happen? Answer A, B, or C based on Chokces below. a 0 Mark A for: We would Expect BigMfli to pay ArTea allow it to Discharge -- we would Expect BigMill to end up being allowed to Emit 25 tons (cleaning up 75 tons) o Mark B for. We would Expect ArTea to not allow any BigMill Discharge - we would Expect BigMill to end up being allowed to Emit 0 tons (cleaning up the full 100 tons) Mark Cfor: We would Expect ArTea to pay BigMill to Discharge -- we would Expect BigMill to end up being allowed to Emit 100 tons (cleaning up tons) If we know BigMill has full Property Rights to the lake and its use: Initially how many tons of effluent are they discharging per day2 25 tons per day What are Total Damage From Pollutant Costs? $ 25 no units What are Total Clean-up Costs? $ 25 no units If we assume both parties will operate as suggested by the Coase theorem (negotiations are possible) which answer below explains what we would expect to happen? Answer A, B, or C based on Choices below. 2 - Mark A for: We would Expect BigMill to Emit as much pollution as they wanted -- we would Expect BigMill to end up Emitting 100 tons (cleaning up O tons) Mark B for: We would Expect ArTea to pay BigMill to clean up some of their Emissions -- We would Expect BigMill to end up Emitting 25 tons (cleaning up 75 tons) Mark C for: We would Expect BigMill to pay ArTea allow it to do some Discharge -- we would expect BigMill to end up being allowed to Emit 50 tons (cleaning up 50 tons) Based on your answers to the Questions above what can we say about the Coase theorem in this example? Answer A, B, or C based on Choices below. 2 Mark A for: This example illustrates a failure of the Coase theorem -- If BigMill owns the lake they will do no clean-up -- If Artea owns the lake we will have the Social Optimal level of Emissions (where Total Social Costs are minimized) -- so we need Government intervention here to ensure we reach the Socially Optimal level of Emissions Mark B for: As Predicted by the Coase theorem -- we end up with 25 tons of emissions per day -- the Social Optimal level (where the MD and MAC curves cross) -- no matter who has the initial Property rights over the lake Mark C for: As Predicted by the Coase theorem -- we end up with 0 tons of emissions per day -- the Social Optimal level (where the Total Pollution Damages are minimized) -- no matter who has the initial Property rights over the lake a NOW Instead of looking at the Impact of the Coase Theorem - Imagine that the Government enacted a strict Environmental ability law (assume it is applied effectively and with minimal Transaction costs) -- that forcas Polluters to pay for every $ of Damage their emissions do. If this Liability Law did make BigMiII fully and effectively responsible for any Pollution Damage they caused--what would we expect their level of Discharge to be? 25 tons per day Why is that the case? Answer A, B, or C based on Cholces below. a Mark A for. The Environmental Liability Law makes BigMill pay for any Pollution Damage they cause -- this drives them to eliminate all emissions (and so pollution/damages). Mark B for: The Environmental Liability Law does not make BigMill do anything -- they will continue emitting what they found to be the profit- maximizing level. Mark C for: The Environmental Liability Law makes BigMill intemalize the Damage their pollution causes as a cost at any emissions level BigMill faces a choice do they Pay Liability Damages (from MD curve) or clean up costs (from MAC) -- this drives them to the Emissions level where the MAC crosses the MD- What is the implication of this? Answer A, B, or C based on Choices below. a e Mark A for: That neither Liability Laws nor Property rights operating through the Coase theorem, can even theoretically lead to the Socially efficient outcome -- so we need direct government intervention to achieve Social efficiency. Mark B for: That both Liability Laws and Property rights operating through the Coase theorem can both theoretically lead to the Socially efficient outcome without any need for direct government intervention. Mark C for: That only the use of Liability Laws can lead to the Socially efficient outcome without any need for direct government 1 Question 3 18.67 / 140 pts Use the Graph below for the following Questions. Each Question is worth 10 points. It shows the Impact of tons of Effluent. Imagine it represents the environmental situation in a county where an Artisinal Ice Tea company (Artea) and a Paper mill (BigMill) both operate. Artea has been using a mountain lake as the source for their spring water-and BigMill's effluent is now impacting this. The graph illustrates through the Marginal Damage (MD) curve, the extra damage another ton of Effluent does to Artea business, and through the Marginal Abatement curve (MAC) how much it costs BigMill per ton to clean this up. All your answers should be based per day values. Each sub-question is worth 10 polnts. $,000 MD 24 Letter $,000 A 25 B 75 MAC 8 C 75 6 D 225 B E 900 C D 0 25 100 Tons Pollutant Discharge per month If we assume Big Mill is undertaking no pollution control: How many tons of effluent are they discharging per day1 tons per day What is the marginal damage of the last ton? $ 24,000 ,000 - no units What is the $ value of the total amount of damage this causes? $ 130,000 ,000 -- no units If we know Artea has full Property Rights to the lake and its use: Initially how many tons of effluent would BigMill be legally discharging per day? 25 tons per day What are Total Damage From Pollutant Costs? $ 6 no units What are Total Clean-up Costs? $ ,000 -- no units If we assume both parties will operate as suggested by the Coase theorem (negotiations are possible) which answer below explains what we would expect to happen? Answer A, B, or C based on Chokces below. a 0 Mark A for: We would Expect BigMfli to pay ArTea allow it to Discharge -- we would Expect BigMill to end up being allowed to Emit 25 tons (cleaning up 75 tons) o Mark B for. We would Expect ArTea to not allow any BigMill Discharge - we would Expect BigMill to end up being allowed to Emit 0 tons (cleaning up the full 100 tons) Mark Cfor: We would Expect ArTea to pay BigMill to Discharge -- we would Expect BigMill to end up being allowed to Emit 100 tons (cleaning up tons) If we know BigMill has full Property Rights to the lake and its use: Initially how many tons of effluent are they discharging per day2 25 tons per day What are Total Damage From Pollutant Costs? $ 25 no units What are Total Clean-up Costs? $ 25 no units If we assume both parties will operate as suggested by the Coase theorem (negotiations are possible) which answer below explains what we would expect to happen? Answer A, B, or C based on Choices below. 2 - Mark A for: We would Expect BigMill to Emit as much pollution as they wanted -- we would Expect BigMill to end up Emitting 100 tons (cleaning up O tons) Mark B for: We would Expect ArTea to pay BigMill to clean up some of their Emissions -- We would Expect BigMill to end up Emitting 25 tons (cleaning up 75 tons) Mark C for: We would Expect BigMill to pay ArTea allow it to do some Discharge -- we would expect BigMill to end up being allowed to Emit 50 tons (cleaning up 50 tons) Based on your answers to the Questions above what can we say about the Coase theorem in this example? Answer A, B, or C based on Choices below. 2 Mark A for: This example illustrates a failure of the Coase theorem -- If BigMill owns the lake they will do no clean-up -- If Artea owns the lake we will have the Social Optimal level of Emissions (where Total Social Costs are minimized) -- so we need Government intervention here to ensure we reach the Socially Optimal level of Emissions Mark B for: As Predicted by the Coase theorem -- we end up with 25 tons of emissions per day -- the Social Optimal level (where the MD and MAC curves cross) -- no matter who has the initial Property rights over the lake Mark C for: As Predicted by the Coase theorem -- we end up with 0 tons of emissions per day -- the Social Optimal level (where the Total Pollution Damages are minimized) -- no matter who has the initial Property rights over the lake a NOW Instead of looking at the Impact of the Coase Theorem - Imagine that the Government enacted a strict Environmental ability law (assume it is applied effectively and with minimal Transaction costs) -- that forcas Polluters to pay for every $ of Damage their emissions do. If this Liability Law did make BigMiII fully and effectively responsible for any Pollution Damage they caused--what would we expect their level of Discharge to be? 25 tons per day Why is that the case? Answer A, B, or C based on Cholces below. a Mark A for. The Environmental Liability Law makes BigMill pay for any Pollution Damage they cause -- this drives them to eliminate all emissions (and so pollution/damages). Mark B for: The Environmental Liability Law does not make BigMill do anything -- they will continue emitting what they found to be the profit- maximizing level. Mark C for: The Environmental Liability Law makes BigMill intemalize the Damage their pollution causes as a cost at any emissions level BigMill faces a choice do they Pay Liability Damages (from MD curve) or clean up costs (from MAC) -- this drives them to the Emissions level where the MAC crosses the MD- What is the implication of this? Answer A, B, or C based on Choices below. a e Mark A for: That neither Liability Laws nor Property rights operating through the Coase theorem, can even theoretically lead to the Socially efficient outcome -- so we need direct government intervention to achieve Social efficiency. Mark B for: That both Liability Laws and Property rights operating through the Coase theorem can both theoretically lead to the Socially efficient outcome without any need for direct government intervention. Mark C for: That only the use of Liability Laws can lead to the Socially efficient outcome without any need for direct government