The curves MD 1 and MD 2 represent the marginal damage of pollution in two regio
ID: 1107882 • Letter: T
Question
The curves MD1 and MD2 represent the marginal damage of pollution in two regions one and two, MAC indicates the marginal abatement cost which is the same in both regions, and Ehigh and Elow indicate emission standards being considered by the EPA. Unregulated emissions are at a level Emax. (use letters from the figure to fill in the blanks for the following questions). (please explain reasoning behind answer)
(a) What would be the efficent standards (levels of pollution) to have in the two regions? Region 1 _____ Region 2 ______
(b) If Elow is chosen as a uniform standard: total damage in region 1 is ________; total damage in region 2 is _________; the total cost of abatement in each region is ________; the deadweight loss is ______
(c) Select the correct answer: Suppose the government wants to set up mission taxes in the two regions. For this policy to be optimal, the tax in region 1 would have to be __(greater than)_(the same as)_(less than)__ the tax in region 2.
33ns die dt d level Emax. MD1 MD2 MAC Ehigh Emissions max 0 lowExplanation / Answer
(a)- Region 1- E low level of pollution that is shown on horizontal axix.
region 2- E high level of population that is shown on horizontal axix.
(b)- Total damage in region 1= the area (a+e+f)
Total damage in region 2= the area (a+b)
total abatement cost in region 1= the area (d+b+c)
total abatement cost= the area (c)
deadweight loss=The area ( g)
(c)- tax rate higher in region 1
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.