Figure 5.11 demonstrates the efficiency implications of using cap- and- trade versus an emissions fee when costs are higher than expected and marginal social benefits are inelastic. Figure 5.12 does the same thing under the assumption of elastic marginal social benefits. Now consider the case where marginal costs turn out to be lower than anticipated. For both capand trade and an emissions fee, show whether there is too much or too little emissions reduction. Which approach is more efficient when marginal social benefits are inelastic and when they are elastic?
Answer to relevant QuestionsSuppose there are five people— 1, 2, 3, 4, and 5— who rank projects A, B, C, and D as follows: a. Sketch the preferences, as in Figure 6.2 . b. Will any project be chosen by a majority vote rule? If so, which one? If ...Assume that the demand curve for milk is given by Q = 100 - 10 P , where P is the price per gallon and Q is the quantity demanded per year. The supply curve is horizontal at a price of 2. a. Assuming that the market is ...Officials at California University of Pennsylvania recently argued that wealthier students should pay higher tuition, and the revenue should be used to offer more scholarships to poorer students [Ansberry, 2010]. This idea ...The international space station is scheduled to de-orbit and expire in a few years. Supporters of maintaining the space station beyond this time argue that one should take into account the money that has already been spent ...To work this problem, you’ll need a calculator that can take logarithms or a spreadsheet program. Suppose that your utility function is U = ln( 4 I ), where I is the amount of income you make in a given year. Suppose that ...
Post your question