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7. If the marginal cost of pollution reduction (abatement) is given by the equation: MC=1.5e, where e = units of pollution reduced by the firm, then the total cost of reducing pollution by 50 units is:


(a) $75
(b) $112.50
(c) $1,875
(d) $3,750

 

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Microeconomics
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Undertaking Marginal Analysis of pollution reduction
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Raushan Raj
Raushan RajLv8
29 Oct 2020

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Related questions

5. A preference for either pollution taxes or marketable permits to regulate pollution is dependent on the relative shape of what two curves?

a. Total cost of damage curve and total cost of pollution reduction curve

b. The marginal cost of pollution reduction curve and the marginal cost of damage curve

c. The marginal revenue of the pollution control curve and the marginal cost of damage curve

d. The marginal benefit of pollution reduction curve and the marginal cost of pollution abatement curve

 

Two firms, Cappcore and Tradiola, are each emitting 6 units of pollution, and the government wants to reduce the total level of pollution from the curent level of 12 to 4. To do this, the government caps each firm's allowed pollution level at 2. Each firm must now pay to cut pollution levels by 4 units. A cap-and-trade policy gives each firms allows them to trade permits if they choose. Based on the table below which represents the situation faced y these two firms, what will the firms want to do?


Cappcore

pollution reduction units MC of reducing pollution TC of reducing pollution

1 $7 $7

2 10 17

3 14 31

4 19 50

5 26 76

6 35 111



Tradiola

pollution reduction units MC of reducing pollution TC of reducing pollution

1 $3 $3

2 4 7

3 6 13

4 9 22

5 14 36

6 21 57


Two firms are ordered by the federal government to reduce their pollution levels. Firm A's marginal cost associated with pollution reduction is MC=150+3Q. Firm B's marginal cost associated with pollution reduction is MC=9Q. The marginal benefit of pollution reduction is MB=270.

a. What is the socially optimal level of each firm's pollution reduction?

b. Compare the social of three possible outcomes:

(1)require both firms to reduce pollution by the same amount.

(2) charge a common tax per unit of pollution.

(3) require both firms to reduce pollution by the same amount, but allow pollution permits to be bought and sold.

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