1. a. Under a strict command-and-control framework, suppose abatement standards
ID: 1179493 • Letter: 1
Question
1. a. Under a strict command-and-control framework, suppose
abatement standards are set equally across polluters. Assume the
total abatement target is set at 30 units. Show the cost implications
using three graphs, each of a different polluter with a unique MAC
curve drawn to depict a low-cost abater, a moderate cost abater,
and a high-cost abater. On each graph, identify the abatement level
corresponding to a uniform standards approach, and show the level
of MAC at that point and the area corresponding to TAC.
b. Now, refer directly to your model, and summarize what would
happen qualitatively to the abatement levels of each firm if the
equimarginal principle of optimality were used. Explain intuitively
why this method would be cost-effective.
2. It is well documented that carbon monoxide (CO) emissions from
combustible engines increase in colder climates. This implies that
damages are expected to be less severe in summer months than in
winter. Nonetheless, air quality control authorities use a standard for CO
that is uniform throughout the year with no allowance for seasonal effects.
Use this information and the following model to answer the questions:
MSB of CO abatement in winter = 350
Explanation / Answer
A reduction in the level of taxation faced by an individual or company. Examples of an abatement include a tax decrease, a reduction in penalties or a rebate. If an individual or business overpays its taxes or receives a tax bill that is too high, it can request an abatement from the tax authorities.
A common type of tax abatement is property tax abatement. Individuals who believe that the assessed value of their property is too high, can appeal to their local tax assessor for a tax abatement. Some localities offer property tax abatement to owners who restore, or improve, historic properties located in designated neighborhoods. Some types of properties, such as those containing non-profit businesses, will be granted tax abatements based on the owner's tax-exempt status.
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