Question

Suppose you are charged with determining the optimal amount of pollution for a community. You are...

Suppose you are charged with determining the optimal amount of pollution for a community. You are told that the marginal social cost (MSC) of pollution for the community can be expressed as a linear relationship over the relevant quantities of pollution. You are also told that the marginal social benefit (MSB) of pollution for the community can be expressed as a linear relationship over the relevant quantities of pollution. data available:

- When there are 10 tons of pollution per day, the marginal costal cost of this level of pollution is $2000 per day

- When there are 20 tons of pollution per day the marginal social cost of this level of pollution is $3000 per day

- When all pollution per day is eliminated, the marginal social benefit of this level of pollution is $10,000 per day

- When there are 100 tons of pollution per day, the marginal social benefit of this level of pollution is $0 per day

A) Given this information write an equation for the MSC for this community. For your equation use MSC as your Y variable and the quantity of pollution (Q) as your X variable. Express your equation in slope-intercept form.

B) Given this information write an equation for the MSB for this community. For your equation use MSB as your Y variable and the quantity of pollution (Q) as your X variable. Express equation in slope intercept form.

C) Given the Equations you found in A and B, determine the optimal amount of pollution for this community. Explain why the optimal amount of pollution is not likely to be zero tons of pollution

Homework Answers

Answer #1

Optimal level of pollution is given by condition where MSB is equal to MSC. If MSB>MSC (at lower level of Q), community will continue production since social profit is positive. this increases MSC and decreases MSB until both become equal. Similarly, if MSC>MSB (for higher level of Q), production will decrease as Social profit (MSB-MSC) is negative to a point where MSB=MSC.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Two firms are ordered by the federal government to reduce their pollution levels. Firm A’s marginal...
Two firms are ordered by the federal government to reduce their pollution levels. Firm A’s marginal costs associated with pollution reduction are MCA = 20+4QA. Firm B’s marginal costs associated with pollution reduction are M CB = 10 + 8QB . The marginal benefit of pollution reduction is M B = 400 − 4(QA + QB ). (a) What is the socially optimal level of each firm’s pollution reduction? (b) Compare the social efficiency of three possible outcomes: (1) require...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of reducing pollution for each firm is as follows: MC1= 3e1and MC2= 45e2, where e1and e2are the amounts (in tons) of emissions reduced by the first and second firms, respectively. Assume that in the absence of government intervention, Firm 1 generates 500 units of emissions and Firm 2 generates 500 units of emissions. Suppose Shreveport regulators decide to reduce total pollution by 400 units. If...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of...
Suppose that two firms emit a certain pollutant in Shreveport, Louisiana. The marginal cost (MC) of reducing pollution for each firm is as follows: MC1 = 3e1 and MC2 = 45e2, where e1 and e2 are the amounts (in tons) of emissions reduced by the first and second firms, respectively. Assume that in the absence of government intervention, Firm 1 generates 500 units of emissions and Firm 2 generates 500 units of emissions. Suppose Shreveport regulators decide to reduce total...
The paper industry is the major industrial source of water pollution. The inverse demand curve for...
The paper industry is the major industrial source of water pollution. The inverse demand curve for the paper market (which is also the marginal benefit curve) is P = 450 - 2Q where Q is the quantity consumed when the price consumers pay is P. The inverse supply curve (also the marginal private cost curve) for refining is MPC = 30 + 2Q. The marginal external cost is MEC = Q where MEC is the marginal external cost when the...
Suppose powerplant emissions are linked to morbidity and mortality in humans who live downwind from the...
Suppose powerplant emissions are linked to morbidity and mortality in humans who live downwind from the powerplant. Suppose in recent years the daily load of emissions into the environment has averaged 4.0 million tons. Also suppose that since the generation of electricity is an important public service the Environmental Protection Agency is reluctant restrict electricity generation. A recent study compiled by the Green Party, an environmental organization, determined that the marginal benefits (in $’s per million tons) of abating emissions...
Suppose that two power plants each releases 200 units of toxic air into the atmosphere per...
Suppose that two power plants each releases 200 units of toxic air into the atmosphere per year. Both firms are ordered by the federal government to reduce their pollution levels. Let Q denote the amount of pollution reduction. Firm A’s marginal costs associated with pollution reduction are M C = 2Q − 20. Firm B’s marginal costs associated with pollution reduction are MC = 3Q. The marginal benefit of pollution reduction is MB = 240. (a) What is the socially...
Problem 1 What is the difference between cost effectiveness and efficiency? Problem 2 Assume that the...
Problem 1 What is the difference between cost effectiveness and efficiency? Problem 2 Assume that the market demand curve for diamonds is given by the following equation: PD = 1000 ? 2 QE, and the market supply curve, which is equal to the aggregated marginal cost curve of all producers, is given by, PS = 200 + 2 QU Diamond production, however, is associated with harmful side effects on both workers and nearby households and firms. The total damage to...
Ques 1: A single community is comprised of just three voters i = {1, 2, 3},...
Ques 1: A single community is comprised of just three voters i = {1, 2, 3}, each of whom have differing tastes for public parks, as described by the following three demand functions. q1 = 100 – 2p q2 = 110 – 2p q3 = 126 – 2p (a) Public parks are a local public good. Assuming that the marginal cost to society, mcs, of providing each unit of park space is $90, what is the socially optimal quantity of...
10. If a good creates a negative externality when it is produced, and you have estimated...
10. If a good creates a negative externality when it is produced, and you have estimated that the dollar amount of the externality is $1.50 per unit produced, then one strategy for achieving the efficient, or optimal level of pollution is to: a. subsidise consumers an amount of $1.50 per unit they consume. b. provide a subsidy to producers equal to $1.50 per unit they produce. c. tax producers $1.50 per unit they produce. d. definitely ban production of the...
A person's utility fromm goods A and B is U(A,B)= A x B. The marginal utilities...
A person's utility fromm goods A and B is U(A,B)= A x B. The marginal utilities of each goods are MUa=B and MUb=A. The person has $120 income to spend on the two goods and the price of both goods equals $1. a) Write the equation for the budget line and sketch it on a graph – identifying relevant intercepts and slope – placing good A on the horizontal axis. b) Find the quantities of A and B that maximize...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT