SO2 Reduction (per ton) $100 2 Emissions Marginal Cost Firm Generator (tons) Uni
ID: 1117249 • Letter: S
Question
SO2 Reduction (per ton) $100 2 Emissions Marginal Cost Firm Generator (tons) Unit A Unit B 500 500 Firm $300 Unit C Unit D $400 500 500 Firm 2 $800 Question 34: Suppose that the electric power industry is made up of two firms, each with two power-generating units. The table above shows the SO2 emissions for each firm and generator. Suppose also that the Environmental Protection Agency (EPA) wants to decrease SO2 emissions by 1000 tons. If the reduction in SO2 emissions occurs at the lowest possible cost, then the total cost of reducing the pollution is C 1 $100,000 C 2) S200,000 3) S250,000 C 4) $400 Question 35: Suppose that the electric power industry is made up of two firms, each with two power-generating units. The table above shows the SO2 emissions for each firm and generator. Suppose also that the Environmental Protection Agency (EPA) wants to decrease SO2 emissions by 1000 tons. If the EPA simply orders each firm to reduce pollution emissions from each generating unit by 50%, the total cost of reducing the pollution is C 1) $400,000 2) S1,000,000 C 3) $250,000 4) $200,000 Question 32: With regard to pollution, from an economist's perspective C 1 we should strive to reduce pollution to the point where the marginal cost of pollution reduction equals the marginal benefit of pollution reduction 2) reducing pollution is a waste of time since it is not counted in GDP 3) we should strive to reduce pollution as much as possible C 4) we should strive to reduce pollution as long as the marginal benefit of doing so is positiveExplanation / Answer
Ans:
34) Option 2 - $200,000
Total cost of reducing the pollution by 1000 tons = 500 * $100 + 500 * $300
= $50,000 + $150,000
= $200,000
35) Option 3 - $250,000
Total cost of reducing the pollution when 500 tons is reduced by each firm
Firm 1 + Firm 2 = 500 * $100 + 500 * $400
= $50,000 + $200,000
= $250,000
32) Option 1
we should strive to reduce pollution to the point where the marginal cost of pollution reduction equals the marginal benefit of pollution reduction.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.