27. Ironworks is a company in Toledo Ohio that is currently producing 700 tons of sulfur dioxide (SO2) per year. The following table gives the marginal cost to Ironworks of reducing emission of So, by one ton. The table shows that the firm's marginal cost increases as it undertakes more pollution reduction. The table also gives the Environmental Protection Agency's estimates of the marginal social benefit of reducing SO2 emissions by Ironworks. The table shows that the marginal benefits decrease as more pollution reduction is achieved. SO, Reduction In Tons 0-100 I 100-200 200-300 300-400 400-500 Marginal Cost per Ton of SO2 Reduction SSO $100 $150 $200 $250 Social Marginal Benefit per Ton of SO, Reduction $250 $200 $150 $100 $50 The socially optimal level of SOreduction per year is _tons. To achieve the social optimum, government should pay Ironworks for each ton of SO, that it does not emit. 200, $100 300, $150 400, $150 500, $100
Related textbook solutions
Related questions
We know that China is one of the most polluted countries. The marginal abatement cost and marginal social cost of pollution in the Beijing area are as follows:
Pollution is measured in metric tons of sulfur dioxide.
| Pollution | Marginal Abatement cost | Marginal Social Cost |
| 10 | 1000 yuan | 0 |
| 20 | 800 | 0 |
| 30 | 600 | 50 |
| 40 | 500 | 100 |
| 50 | 400 | 200 |
| 60 | 300 | 300 |
| 70 | 150 | 500 |
Find the socially efficient level of pollution, and explain how a marketable permit scheme can achieve an efficient outcome.
How many permits should be issued?
In some states, mining for coal leaves large mounds of rubble, which poses flooding problems, causes land damage, and is unsightly. The following table shows the estimated annual social benefits and costs of restoring various amounts of such land:
| Land restored (in acres) | 0 | 100 | 200 | 300 | 400 | 500 |
| Social benefits (per 100 acres) | 0 | $110 | $200 | $280 | $350 | $420 |
| Social costs (per 100 acres) | 0 | $50 | $120 | $200 | $300 | $430 |
(a) Compute the marginal social benefits and the marginal social costs for each restoration level:
Instructions: Enter your responses as a whole number.
| Land restored (in acres) | 0 | 100 | 200 | 300 | 400 | 500 |
| Marginal social benefit (per 100 acres) | - | $ | $ | $ | $ | $ |
| Marginal social cost (per 100 acres) | - | $ | $ | $ | $ | $ |
(b) What is the optimal rate of land restoration?
acres
