Chap6 - The Economics of Pollution &...

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Unformatted text preview: The Economics of Pollution & Environmental Policy- Chapter 6 Econ 101.01 Fall 2011 Prof. Michael Potepan Pollution as a negative externality Externalities are additional costs or benefits that are not captured by buyers or sellers of a good Pollution is a negative externality Example: filling your gas tank the $4.09 pump price reflects only some of the costs environment costs affecting others not included buy you decide how much gas to buy on basis of the $4.09 market price if you had to pay an additional $2.00 in external costs, you probably would buy less Pollution as a negative externality Pollution is a cost to people who must suffer the costs But pollution is a benefit to producers and consumers of the good producers can dispose of waste at a low or zero cost if consumers dont have to pay for these costs, they pay less What is the optimal level of pollution? probably less than the status quo probably more than zero Take-home exercise Question One Take-home exercise Question One = $7.50 - $4.00 = $3.50 Take-home exercise Question One = $7.50 - $4.00 = $3.50 = $6.25 - $4.00 = $2.25 Take-home exercise Question One = $7.50 - $4.00 = $3.50 = $6.25 - $4.00 = $2.25 = $4.75 - $4.00 = $0.75 Take-home exercise Question One = $7.50 - $4.00 = $3.50 = $6.25 - $4.00 = $2.25 = $4.75 - $4.00 = $0.75 = $0 Take-home exercise Question One = $7.50 - $4.00 = $3.50 = $6.25 - $4.00 = $2.25 = $4.75 - $4.00 = $0.75 = $0 CS = $3.50 + $2.25 + $.75 = $6.50 Take-home exercise Question One $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 0 1 2 3 4 Willingness to Pay Pizza Market Price Take-home exercise Question One $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 0 1 2 3 4 Willingness to Pay Pizza Market Price Grouchos CS = $3.50 Take-home exercise Question One $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 0 1 2 3 4 Willingness to Pay Pizza Market Price Grouchos CS = $3.50 Chicos CS = $2.25 Take-home exercise Question One $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 0 1 2 3 4 Willingness to Pay Pizza Market Price Grouchos CS = $3.50 Chicos CS = $2.25 Harpos CS = $.75 Take-home exercise Question Two part a. $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 0 100 200 300 400 Price Quantity Demand Supply Take-home exercise Question Two part a. $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 0 100 200 300 400 Price Quantity Supply Demand Take-home exercise Question Two part a....
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This note was uploaded on 10/12/2011 for the course ECON 101 taught by Professor Pgking during the Spring '08 term at S.F. State.

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Chap6 - The Economics of Pollution &...

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