w AutoSave (On Fy BEA111 Assignment 1 - Microeconomics . Saved Search (Alt+Q) mitchell noisier MN File Home Insert Draw Design Layout References Mailings Review View Help Comments v Share BEAll1 Introduction to Markets and the Economy - Assignment 1 Microeconomics BEAll1 Introduction to Markets and the Economy - Assignment 1 Microeconomics Question 7 -50 marks (2-5 sentences + calculations per policy per section) Reference Suppose there are two firms, A and B, that each currently release 4 tonnes of COz emissions per week, https://www.pedestrian.tvews/instant-noodle-prices-increase-russia-ukraine/ accessed on resulting in 8 tonnes of CO2 emissions per week. A study shows that total economic surplus can be 24.03.2022 Increased by reducing the total level of emissions by 4 tonnes of CO2 emissions per week. The cost to each of the two firms of reducing their emissions is shown in the table below. https://www.abc.net.auews/2022-03-20/instant-noodles-price-increase-ukraine-russia- war/100896348 accessed on 24.03.202 tonnes of COz removed per Total Cost Total Cost to Bureau of Transport Economics (BTE), 1986. Demand for Australian Domestic Aviation week to Firm A Firm E Services: Forecasts by Market Segment, Occasional Paper 79, AGS, Canberra. O $0 $10 $25 Goodwin, P.B., 1992. A review of new demand elasticities with special reference to short and $25 $70 long run effects of price changes. Journal of Transport Economics and Policy, pp.155-169. $45 $135 $90 5220 Ferguson, M., 2022. Try Our Buses For Free, Press Release, Minister for Infrastructure and Transport Tasmanian Government, Hobart. Available at The government has proposed three policy options to reduce the total level of emissions by 4 tonnes https://www.premier.tas.gov.au/site resources 2015/additional releases/try our buses for of COz emissions per week free delivering cost of living relief with free bus travel accessed on 24.03.2022 a. Introduce laws requiring all firms to reduce their CO2 emissions by 2 tonnes per week. Introduce a carbon tax of $30 per tonne of COz emissions. C. The government will issue each firm with two permits. Each permit a firm holds allows it to emit 1 tonne of COz emissions per week. If a firm does not hold enough permits it must reduce its CO2 emissions. Firms can trade the permits with one another. Explain and evaluate each of the three policies. In particular i. Explain how each policy will work to reduce pollution. ii. How much each policy will cost each firm and in total, less any government revenue. jii. How successful each policy would be if the costs of removing each tonne of Coz per week twice as high as what was initially thought. Hints You may want to convert each firm's Total Cost of reducing CO2 into the Marginal Costs of reducing COz so that you can determine how they will react to policy b and c. A carbon tax gives will introduce a benefit for firms when reducing pollution. The cost to a firm of selling one of its permits is that it must pay to reduce CO2 emissions by an additonal tome. The benefit to a firm of buying an additional permit is that it doesn't to pay to reduce CO2 emissions on the last tonne of COz it emitted. Activate Windows Go to Settings to activate Windows. UNIVERSITY of @ University of Tasmania - CRICOS PROVIDER CODE 00586B 15 UNIVERSITY of TASMANIA TASMANIA @ University of Tasmania - CRICOS PROVIDER CODE 00586B 16 Page 15 of 16 4144 words DX English (Australia) 1 Accessibility: Investigate [ Focus 90% O 1 - W 15 C Cloudy ~ (1) ENG 2:30 PM Type here to search 19/04/2022w AutoSave On S BEA111 Assignment 1 - Microeconomics . Saved . Search (Alt+Q) mitchell noisier MN X File Home Insert Draw Design Layout References Mailings Review View Help Comments v Share BEAll1 Introduction to Markets and the Economy - Assignment 1 Microeconomics Question 6 - 40 marks (2-5 sentences + calculations per section) Currently, 6 fishers send one boat each week, to fish a stock of mackerel (blue mackerel, jack mackerel and red bait) off Tasmania's east coast. Each boat returns with a catch worth $2,700. It costs $2,000 per boat per week to send it out fishing. Every additional boat beyond 6, that is sent to fish Southern Calamari results in the catch falling by $150 for every boat out fishing in Tasmania's state waters. Assume the Tasmanian mackerel fishery is not regulated. a. Bill is one of the 6 fishers and is considering sending out additional boats each week. If all other fishers continue to send one boat only, how many fishing boats should Bill send out to maximise profit? Explain why. (10 marks) b. Explain why Bill has an incentive to send an additional boat to fish for mackerel, but that this is not socially optimal. Is there an externality when Bill sends out an additional boat? (10 marks) C. If all other fishers of mackerel think the same as Bill, how many boats will fish for mackerel off Tasmania's east coast each week? How many $ of fish will be caught per boat? (5 marks) d. Explain why the unregulated Tasmanian mackerel fishery is a common resource and results in a "Tragedy of the Commons". (10 marks) e. Suggest a policy that the Tasmanian Government could implement to reduce or eliminate the overfishing of mackerel and briefly why it would work. (5 marks) Activate Windows Go to Settings to activate Windows. Page 14 of 16 4144 words DX English (Australia) % Accessibility: Investigate Focus 130% Type here to search O Ei 15 C Cloudy ~ (1) ENG 2:30 PM 19/04/2022