Author Question: The marginal social costs and abatement costs of a certain type of air pollution for a factory are ... (Read 90 times)

vicky

  • Hero Member
  • *****
  • Posts: 586
The marginal social costs and abatement costs of a certain type of air pollution for a factory are given as:
 
  MSC = -1121 + 22.5Q MCA = 879 - 17.5Q,
  where Q = units of pollution per day, and MSC and MCA are measured in dollars. The factory is located in a small town that is currently setting community standards. You have been hired to perform the analysis requested below.
 
  a. If the community wishes to set a pollution standard for the factory, what daily level of pollution should be allowed?
  b. As an alternative, some members of the town council favor an emissions tax for the factory. If a tax is implemented, at what level should the tax be set?

Question 2

Recently, Skooterville has experienced a large growth in population. As a result, the demand curve for telephone service in Skooterville:
 
  A) has shifted to the right.
  B) has shifted to the left.
  C) has shifted down.
  D) Both B and C are correct.
  E) none of the above



lou

  • Sr. Member
  • ****
  • Posts: 286
Answer to Question 1

a.
To determine the optimal level of pollution, we equate MSC to MCA
-1121 + 22.5Q = 879 - 17.5Q
-2,000 = -40Q
Q = 50
50 units of pollution is optimal.

b.
To determine tax, examine MSC or MCA at optimal level.
MCA = 879 - 17.5(50 )
MCA = 4
set tax = MCA = MSC = 4.

Answer to Question 2

A



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

If you could remove all of your skin, it would weigh up to 5 pounds.

Did you know?

According to animal studies, the typical American diet is damaging to the liver and may result in allergies, low energy, digestive problems, and a lack of ability to detoxify harmful substances.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Did you know?

Children of people with alcoholism are more inclined to drink alcohol or use hard drugs. In fact, they are 400 times more likely to use hard drugs than those who do not have a family history of alcohol addiction.

Did you know?

According to research, pregnant women tend to eat more if carrying a baby boy. Male fetuses may secrete a chemical that stimulates their mothers to step up her energy intake.

For a complete list of videos, visit our video library