Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

*stuck with c and d* please help! thank you! The Pristine River has two polluting firms on its banks. Acme Industrial and Creative Chemicals each

*stuck with c and d* please help! thank you!

The Pristine River has two polluting firms on its banks. Acme Industrial and Creative Chemicals each dump 100 tons of glop into the river each year. The cost of reducing glop emissions per ton equals $10 for Acme and $100 for Creative. The local government wants to reduce overall pollution from 200 tons to 50 tons.

(b) In a more typical situation, the government does not know the cost of pollution reduction for each firm. If the government decides to reach its overall goal by imposing uniform reductions on the firms, calculate the cost to each firm, and the total cost to the firms together.

***(c) Now suppose the government gives each firm 25 tons of tradable pollution permits. Who sells permits and how many does it sell? What would be the price of permits? What is the total cost of reduction to the firms together in this situation? Do you prefer policy in part (b) or in this part?

***(d) Now suppose the government could not decide how much pollution is socially desirable, but it knows that each ton of glop dumped imposes a social cost of $50. What should the government do now? Under such a government policy, how much pollution would be reduced altogether? What is the total cost of reduction in this situation? Do you think the cost is minimized for reducing that total amount of pollution? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Security How To Plan Implement And Audit Netsuite Security

Authors: Zenobia Plautz

1st Edition

B0B5KQKXSY, 979-8840043851

More Books

Students also viewed these Accounting questions

Question

=+ What are the major forms of quantitative research?

Answered: 1 week ago

Question

Use a three-step process to develop effective business messages.

Answered: 1 week ago