Suppose there is a sharp improvement in the technology for controlling

# Suppose there is a sharp improvement in the

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permits. Suppose there is a sharp improvement in the technology for controlling pollution. a. Using graphs similar to those in Figure 4, illustrate the effect of this development on the dem pollution rights. An improvement in technology that controls pollution would lower the demand for pollution rights w would shift the demand curve left. It is what happens if there was a corrective tax and the figure out black is what would happen with a fixed supply of pollution permits. The curve I have labeled D1 is demand curve for the original pollution rights and the one I labeled D2 is for the new demand for po rights after technology improvements. b. What is the effect on the price and quantity of pollution under each regulatory system? Expl With corrective taxes in place, the pollution price would stay the same and not change and the quant pollution would decline. With pollution permits, the pollution price would go down and the quantity pollution would stay the same (unchanged).
Price of Pollution A P1 P2 D1 D2 Quantity of Pollution Price of pollution B D1 D2 Q2 Q1 Quantity of Pollution achieve ollution mand for which tlined in s the ollution lain . tity of y of Corrective Tax Supply of Pollutio
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Four roomates are planning to spend the weekend in their dorm room watching old movies, an how many to watch. Here is their willingness to pay for each film: Judd Joel Gus Tim First Film \$7 \$5 \$3 \$2 Second Film6 4 2 1 Third Film 5 3 1 0 Fourth Film 4 2 0 0 Fifth Film 3

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