Suppose there is a chemical plant which emits waste every day to make the living environment become. Here is a table to show the exact MB MC and MD it caused Output (ton) | MC | MB | MD 1 | 1200 | 2400 | 300 2 | 1400 | 2400 | 400 3 | 1600 | 2400 | 500 4 | 1800 | 2400 | 600 5 | 2000 | 2400 | 700 6 | 2200 | 2400 | 800 7 | 2400 | 2400 | 900 How many chemical products would be produced by this plant? What is the efficient output of chemical products? Make a graph to show your result The tree planting is an activity with obvious positive externalities (External benefit) Supposing the MC is constant at 100, the Marginal benefit is 400-5X, and the external benefit is constant at 50 to all the other members living in this neighbourhood. How many trees should be planted? What is the efficient output?
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This is the efficient output level. From the table, we can see that the MC is constant at 2400 for all output levels. We need to find the output level where MB - MD = MC. Output (ton) | MC | MB | MD | MB - MD ------------------------------------- 1200 | Show more…
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A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwood's forest and grow corn, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. a. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. b. Which choices display productive efficiency? How can you tell? c. Which choices show allocative efficiency? How can you tell? d. In the choice between $T$ and $R$, decide which one is better. Why? e. In the choice between $\mathrm{T}$ and $\mathrm{S}$, can you say which one is better, and why? f. If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
In the Land of Purity, there is only one form of pollution, called "gunk." Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations are chosen. $$ \begin{array}{l|l|l} \hline {\text { Combos }} & \text { Eco Output } & \text { Gunk Cleaned Up } \\ \hline \mathrm{J} & 800 & 10 \% \\ \hline \mathrm{K} & 500 & 30 \% \\ \hline \mathrm{L} & 600 & 40 \% \\ \hline \mathrm{M} & 400 & 40 \% \\ \hline \mathrm{N} & 100 & 90 \% \\ \hline \end{array} $$ a. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. b. Which choices display productive efficiency? How can you tell? c. Which choices show allocative efficiency? How can you tell? d. In the choice between $\mathrm{K}$ and $\mathrm{L}$, can you say which one is better and why? e. In the choice between $\mathrm{K}$ and $\mathrm{N}$, can you say which one is better, and why? f. If you had to guess, which choice would you think is more likely to represent a command-andcontrol environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice $\mathrm{L}$ or $\mathrm{M}$ ? Why?
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