ps7_sol1 - Solutions to Practice Problem Set 7 utions ECON...

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Solutions to Practice Problem S ECON 100C Perloff Chapter 17 17.1 Why is zero pollution not Why or why not? Zero pollution is probably production results in som which requires trucks). Th consumer and producer su would be extremely high f very low. Figure 17.2 in t 17.4 In Figure 17.3, the govern output. Suppose that a technolog production. Discuss the welfare i When the marginal privat gunk produced). If the tax figure, it is not high enou level given that the margi production. The output le which is greater than the n increases because the pric production beyond the so the tax changes with quan cost plus the tax will equa producing to producin 1 Set 7 t the best solution for society? Can there be too l ly impossible to attain even if it were desirable. A e level of pollution (even spring water has to be hus no pollution means no production, and the e surplus that it creates. The marginal cost of pollutio for the last units of pollution, and the marginal ben the text illustrates this trade-off. rnment may optimally regulate the paper market gical change drives down the private marginal co implications if the output tax is unchanged. te cost of output falls, output increases (as does t x remains unchanged at $84, as shown by the da ugh to decrease the firm’s output to the new socia inal damage from pollution is higher at higher le evel the firm will choose when facing the unchan new optimal output level . Thus, although con ice falls, there is a deadweight loss associated wit ocially optimal level. Note that if instead of a spe ntity so that , the firm’s new priv al the social marginal cost, and the firm wi ng and there will be no deadweight loss. little pollution? Any type of e delivered, elimination of the ion elimination enefits would be t by taxing ost of the quantity of ashed line in the ially optimal evels of nged tax is , nsumer surplus ith the excess ecific tax of $84, ivate marginal ill shift from
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17.5 Suppose that the only way The government imposes a tax on from the pollution. Show that the Because the monopoly pri same as in the competitive quantity leads to productio demand, deadweight loss greater than marginal soci to marginal harm at Q S ) w Q M to Q S ). Although price smaller than before the ta 17.12 According to the applicatio greater risk. What possible actions generated by SUVs? Explain. If SUVs impose an externa reduce the negative extern decrease the quantity of SU number of SUVs on the ro restricting the use of SUVs be more costly to impleme 17.17 Suppose a family’s value is coach. The total price of first-class traveling in first class is $500. Bec family’s net value of traveling in c (but is worried that the family’s yo offer to pay the family to fly in coa a. Suppose that the busin first-class travel. What 2 y to reduce pollution from paper production is to n the monopoly producer that is equal to the ma e tax may raise welfare. rice without a tax is not at marginal cost, the optim
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This note was uploaded on 10/21/2010 for the course ECON 1530 taught by Professor Ohly during the Spring '10 term at Dartmouth.

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ps7_sol1 - Solutions to Practice Problem Set 7 utions ECON...

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