Question text Suppose Yellow Air, Inc. is emitting 4 tons and Red Water, Inc. is emitting
Question:
Question text
Suppose Yellow Air, Inc. is emitting 4 tons and Red Water, Inc. is emitting 4 tons of waste in to the atmosphere each year. Yellow Air can reduce emissions ata rate of $30,000 per ton per year, but it costs $40,000 per ton per year for Red Water to reduce emissions. If the government wants to reduce pollution emissions by at least 4 tons per year then its hould impose a Pigovi an tax in the amount of which would cause a resource cost in the amount of ?
Question text
Suppose Yellow Air, Inc. is emitting 4 tons and Red Water, Inc. is emitting 4 tons of waste in to the atmosphere each year. Yellow Air can reduce emissions ata rate of $30,000 per ton per year, but it costs $40,000 per ton per year for Red Water to reduce emissions. How much would it cost society to reduce pollution by 4 tons per year if the government imposed a maximum emissions standard that required each firm to cut its emissions by 2 tons per year?
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson