Hello, I really need help solving these questions. My ta canceled office hours a

Question

Hello, I really need help solving these questions. My ta canceled office hours and discussion that I am unsure of how to solve these problems. Thank you.

MAC MD TaxlevelasooooaoaH Pollution level Po Unregulated Pollution level 1.8 (4 points) What is the total social cost under standard policy? a. A+2B+C b. A+B c. B+C d. A+B+C 1.9 (2 points) Which environmental policy is more socially efficient? . Tax b. Standard c. Both tax and standard policies are equally efficient 1.10 (4 points) What is the difference in social cost between the tax policy and the standard policy? a. A+B+C b. B+C

Explanation / Answer

Economic activity causes pollution. Pollution is a spillover cost of production that causes inequality and distorts the allocation of resources. Government therefore regulates private business by the standard approach and incentive based environmental policies. With the standard approach, a maximum acceptable level of pollutant is established and firms that exceed this level are punished by the means of fine. On the other hand, the incentive-based regulation schemes are pollution fees and pollution permits that utilize efficiencies of the marketplace.

Two classification of standard approach is: (a) Performance standard, (b) Design standard.

The total social cost under standard policy is the cost of abatement of pollution for the firm up to the level of efficient emission P0 is A and the social cost of pollution level P0 is B. Then the total cost is A+B.

The correct option is

A socially efficient policy is one which imposes minimum cost to the society. Under tax approach the social cost is A+B and the government revenue is C+B. Then the difference between tax and standard approach is area C in government revenue. Then tax approach creates benefit to the society. Hence, the correct option is

The difference between tax and standard approach is the area C. Then the correct option is

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.