2) 1 tons/day 3) 3 tons/day 4) 6 tons/day Q2 ) Suppose the Environmental Protect

Question

2) 1 tons/day

3) 3 tons/day

4) 6 tons/day

Q2 ) Suppose the Environmental Protection Agency decides that the amount of chlorine dumped into the river must be cut by 50% (that is, from 12 tons per day to 6 tons per day). What will be the total costs of reducing chlorine emissions if each plant is required to cut its emissions in half (i.e., reduce their emissions by 2 tons per day)?

1) $160

2) $310

3)$360

4) $410

Q3 ) Suppose the Environmental Protection Agency sets a tax on pollution equal to $80/ton. What will be the total cost of the reduction in emissions per day?

1)$210

2) $285

3) $490

4) $610

Use the following table to answer the next four questions. The table presents the costs of reducing chlorine emissions in a river from each of three plants. If unregulated, each plant will dump 4 tons of chlorine in the river each day (a total of 12 tons) Tons of Chlorine Reduced Per Da First Ton Second Ton Third Torn Fourth Ton Marginal Costs of Reducing Chlorine Plant 1 Plant 2 Plant 3 $10 25 50 75 $50 75 125 150 $100 150 200 300 Suppose the Environmental Protection Agency sets a tax on chlorine emissions equal to $80/ton. Each plant can decide to pay the tax and continue polluting or stop polluting and avoid the tax. What will be the total reduction in pollution emissions per day?

Explanation / Answer

Ans:

Total pollution emissions per day = 12 tons

Tax per ton of pollution emitted = $80 per ton.

If the marginal cost of reducing the pollution is less than $80 per ton, the plants will incure the cost and stop polluting. In such case no tax will be paid.

If the marginal cost of reducing the pollution is more than $80 per ton, the plants will pay tax and continue polluting.

Plant-1

Since the marginal cost of reducing pollution for all four tons for plant-1 is less than $80 per tone. Plant-1 will incure the cost of $160 .i.e($10 + $25 + $50 + $75) and reduce four tons of pollution.

Plant-2

Since the marginal cost of reducing pollution for first and second ton for plant-2 is less than $80 per tone. Plant-2 will incure the cost of $125 .i.e($50 + $75) and reduce 2 tons of pollution.

Since the marginal cost of reducing pollution for third and fourth ton for plant-2 is more than $80 per tone. Plant-2 will pay tax for third and fourth ton and continue polluting.   

Total tax paid for 2 tons of pollution = $160 .i.e($80+$80)

Plant-3

Since the marginal cost of reducing pollution for all four tons for plant-3 is more than $80 per tone. Plant-3 will pay tax for all four tons and continue polluting.   

Total tax paid for 4 tons of pollution = $320 .i.e($80+$80+$80+$80)

Answers

Q1)

4) 6 tons/day

Total reduction in pollution = plant-1 + Plant-2

= 4 tons + 2 tons

= 6 tons

Q2)  

4) $410

Cost when two tons of pollution is to be reduced by each plant = Plant-1 + Plant-2 + Plant-3

= ($10+$25) + ($50+$75) + ($100+$150)

= $35 + $125 + $250

= $410

Q3) Total cost of the reduction in emissions per day when tax is $80 per ton = $285 .i.e($160+$125)

  Plant-1 will incure the cost of $160 .i.e($10 + $25 + $50 + $75)

  Plant-2 will incure the cost of $125 .i.e($50 + $75)

  

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

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