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Economics 11th Edition by William McEachern
Edition 11ISBN: 978-1305505469Economics 11th Edition by William McEachern
Edition 11ISBN: 978-1305505469 Exercise 14
MARKET FOR POLLUTION RIGHTS The following graph shows the market for pollution rights.
a. If there are no restrictions on pollution, what amount is discharged?
b. What is the quantity supplied and the quantity demanded if the government restricts the amount of discharge to Q * but gives the permits away?
c. Where is market equilibrium if the government sells the permits? Illustrate this on the graph.
d. What happens to market equilibrium if the government reduces the amount of discharge permitted to Q ** ? Illustrate this on the graph.
e. How could an environmental group ensure a lower rate of discharge than that chosen by public officials?
a. If there are no restrictions on pollution, what amount is discharged?
b. What is the quantity supplied and the quantity demanded if the government restricts the amount of discharge to Q * but gives the permits away?
c. Where is market equilibrium if the government sells the permits? Illustrate this on the graph.
d. What happens to market equilibrium if the government reduces the amount of discharge permitted to Q ** ? Illustrate this on the graph.
e. How could an environmental group ensure a lower rate of discharge than that chosen by public officials?
Explanation
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Verified
Marginal social cost:
Marginal social c...
Economics 11th Edition by William McEachern
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