# 6 achieving lower pollution suppose a political

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Chapter 9 / Exercise 72
Finite Mathematics and Applied Calculus
Costenoble/Waner
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6. Achieving lower pollution Suppose a political candidate criticizes a government pollution permit policy that she says lets corporations buy and sell the right to pollute. She argues that our right to breathe and the future of our planet require real regulation instead of this type of government policy. Which of the following describes why most economists would disagree with her statement? A corrective tax would result in a more efficient outcome than either tradable permits or government regulation would. A free market in tradable pollution permits is typically more efficient than government regulation. Clean air is a fundamental right, and government regulation will allow too much pollution. The environment is so important that it should be protected as much as possible, regardless of the cost.
7. Correcting for negative externalities - Taxes versus tradablepermits Suppose the government has determined that the socially optimal quantity of sulfur dioxide emissions is 120 million tons per day. One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. A tax (or price in this case) of \$20 per ton of sulfur dioxide emitted will achieve the desired level of pollution. Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of sulfur dioxide per day. To achieve the socially optimal quantity of pollution, the government auctions off 120 million pollution permits. Given this quantity of permits, the price for each permit in the market for pollution rights will be \$20 If this is all the information the government has, which solution to reduce pollution is appropriate? Check all that apply. .
8. The effects of property rights on achieving efficiency Complete the following table by computing the total profit (the fish cannery's economic profit and the campground's economic profit combined) with and without recycling.
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Chapter 9 / Exercise 72
Finite Mathematics and Applied Calculus
Costenoble/Waner
Expert Verified
Action Profit Fish Cannery Campground Total (Dollars) (Dollars) (Dollars) No Recycling 2,300 2,000 4,300 Recycling 1,800 2,800 4,600