nicafactorylocatednext to a farm) Airborne aimions from the chemical factory dam
ID: 2335614 • Letter: N
Question
nicafactorylocatednext to a farm) Airborne aimions from the chemical factory damage crops on the farm. The marginal benefits of emissions to the factory and the marginal costs of damage to the farmer are as follows: Quantity of emissions 100 200 300 400 500 600 700 8430 WW inal benefit to factory 320 280 240200 320 | 280 | 240 | 200 | 160 | 120 | 80 | 40 | 0 ($000) Marginal cost to farmer 10130 150170190210 230 250 270 ($000) p.66 ) Suppose that there are no laws preventing the chemical factory from emitting pollution. How much pollution will it emit? Briefly explain why. From an economic point of view, what is the socially optimal level of ssions from the chemical factory? Briefly explain why, using a graph to support your answer Again, assuming there are no laws preventing the factory from polluting, deseribe how the socially efficient outcome could be achieved using the Coase Thcorcm d) While the Coase Theorem solution from part (e) is economically fficient, do you think it is equitable? Briefly explain why or why not.Explanation / Answer
Answer:
1.The substance plant will emanate contamination till minor advantage be zero. along these lines, the firm will emanate contamination (e)=900.
2. The socially ideal level of contamination will be till minimal advantage is more noteworthy than or equivalent to peripheral expense along these lines at socially ideal level firm create contamination (e)=400.
3.The coarse hypothesis proposes that if the property rights are legitimately exasperates then the gatherings will exchange with one another to socially ideal level,therefore the general public will pay $ 100 to the advise to deliver outflow (e)=400 which is socially ideal.
4. The arrangement from part c isn't impartial on the grounds that there is an exchange off expected to accomplish the balance.
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