Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

the previous question #5 is for reference to question #6 to help answer it. i need a answer for #6 6. How much would each

the previous question #5 is for reference to question #6 to help answer it. i need a answer for #6
image text in transcribed
image text in transcribed
6. How much would each car owner receive as a dividend at year's end in this scenario? Note: You can assume that average vehicle use (12,000 miles driven per year) at the average fuel economy (22 miles per gallon) will correspond to average use overall. Dividends are distributed equally and we are assuming that the dividend received will correspond to average use. This simplification ignores a lot. For example it ignores that many people do not drive at all but would be included in a dividend program that distributed dividends equally to all citizens. 5. In this exercise, we'll consider the effect of a Revenue-Neutral Carbon Tax (often also called a Carbon Fee and Dividend). In some policy discussions a fee of $80 per ton of carbon dioxide emitted has been suggested. This is the figure we'll use for this problem. We are also going to simplify the problem by considering only personal vehicles. We assume the fee is collected at the gas pump (by increasing the cost of gas), and the dividend is distributed only to car owners. These simplifications will allow us to make calculations based on U.S. averages related to vehicles and still allow us to get an idea of how the system might actually work in practice. (a) In Lesson 1, during the first week of the course, we learned that burning 1 gallon of gas emits about 20 pounds of CO2. If the fee is $80 per ton of CO2 emitted, by how much would this raise the cost of gasoline at the pump? Note: In this step we just want to see how the price at the pump would change; we are ignoring the fact that there will later be a refund. (b) In the U.S., a vehicle is driven 12,000 miles per year (on average). The average fuel economy is 22 miles per gallon. A 2016 Toyota Prius gets 58 miles per gallon (city) and a 2012 Chevy Suburban gets 12 miles per gallon (city). Compute the total carbon fee for one year for each vehicle (average vehicle, 2016 Prius, and 2012 Chevy Suburban), assuming the fee is $80 per ton of CO, and 12,000 miles of city driving. 6. How much would each car owner receive as a dividend at year's end in this scenario? Note: You can assume that average vehicle use (12,000 miles driven per year) at the average fuel economy (22 miles per gallon) will correspond to average use overall. Dividends are distributed equally and we are assuming that the dividend received will correspond to average use. This simplification ignores a lot. For example it ignores that many people do not drive at all but would be included in a dividend program that distributed dividends equally to all citizens. 5. In this exercise, we'll consider the effect of a Revenue-Neutral Carbon Tax (often also called a Carbon Fee and Dividend). In some policy discussions a fee of $80 per ton of carbon dioxide emitted has been suggested. This is the figure we'll use for this problem. We are also going to simplify the problem by considering only personal vehicles. We assume the fee is collected at the gas pump (by increasing the cost of gas), and the dividend is distributed only to car owners. These simplifications will allow us to make calculations based on U.S. averages related to vehicles and still allow us to get an idea of how the system might actually work in practice. (a) In Lesson 1, during the first week of the course, we learned that burning 1 gallon of gas emits about 20 pounds of CO2. If the fee is $80 per ton of CO2 emitted, by how much would this raise the cost of gasoline at the pump? Note: In this step we just want to see how the price at the pump would change; we are ignoring the fact that there will later be a refund. (b) In the U.S., a vehicle is driven 12,000 miles per year (on average). The average fuel economy is 22 miles per gallon. A 2016 Toyota Prius gets 58 miles per gallon (city) and a 2012 Chevy Suburban gets 12 miles per gallon (city). Compute the total carbon fee for one year for each vehicle (average vehicle, 2016 Prius, and 2012 Chevy Suburban), assuming the fee is $80 per ton of CO, and 12,000 miles of city driving

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions