{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chap6 - The Economics of Pollution Environmental Policy...

Info iconThis preview shows pages 1–22. Sign up to view the full content.

View Full Document Right Arrow Icon
The Economics of Pollution & Environmental Policy- Chapter 6 Econ 101.01 Fall 2011 Prof. Michael Potepan
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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
Background image of page 2
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 don’t 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
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Take-home exercise Question One
Background image of page 4
Take-home exercise Question One = $7.50 - $4.00 = $3.50
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Take-home exercise Question One = $7.50 - $4.00 = $3.50 = $6.25 - $4.00 = $2.25
Background image of page 6
Take-home exercise Question One = $7.50 - $4.00 = $3.50 = $6.25 - $4.00 = $2.25 = $4.75 - $4.00 = $0.75
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Take-home exercise Question One = $7.50 - $4.00 = $3.50 = $6.25 - $4.00 = $2.25 = $4.75 - $4.00 = $0.75 = $0
Background image of page 8
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
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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
Background image of page 10
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 Groucho’s CS = $3.50
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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 Groucho’s CS = $3.50 Chico’s CS = $2.25
Background image of page 12
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 Groucho’s CS = $3.50 Chico’s CS = $2.25 Harpo’s CS = $.75
Background image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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
Background image of page 14
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
Background image of page 15

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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 C.S. = 1 2 200 $4 ( ) = $400 Height = $4 Base = 200 Demand Supply
Background image of page 16
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 P.S. = 1 2 200 $2 ( ) = $200 Height = $2 Base = 200 Demand Supply
Background image of page 17

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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 P.S. = 1 2 200 $2 ( ) = $200 C.S. = 1 2 200 $4 ( ) = $400 Demand Supply
Background image of page 18
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 P.S. = 1 2 200 $2 ( ) = $200 C.S. = 1 2 200 $4 ( ) = $400 T.S. = = $400 + $200 = $600 Demand Supply
Background image of page 19

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Take-home exercise Question Two – part b. $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Price Quantity Supply Demand
Background image of page 20
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}