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Question: paper factories emit chemicals as a waste product this generates...

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Paper factories emit chemicals as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a negative externality of paper production. Imagine the Australian government wants to correct this market failure by getting tirms to internalise the cost ot pollution. To do this, the government can charge firms for pollution rights (the right to emit a given quantty of chemicals). The following graph shows the daily demand for pollution rights. Now imagine the Australian government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one tonne of chemicals per day. To achieve the socially optimal quantity of pollution, the government auctions off 350 million pollution permits. Given this quantity of permits, the price for each permit In the market for pollution rights will be Use the graph input tooi to help you answer the following questions. You wil not be graded on any chanes you make to this graphi. Note: Once you enter a value in a white field, thピgraph and any 때 responding amounts in each grey field will change accordin The previous analysis hinges on the government having good information regarding either the demand for pollution permits or the optimal level of pollution (or both). Given that the appropriate policy (tradable permits or corrective taxes) can depend on the available information and the policy goal consider the following scenario Graph Input Tool Daly Demand for Pollution Rights Price Dos per one 450 An environmental study conducted in a particular city suggests that if a chemical plant emits more than 20 million tonnes of chemicals each year, the water supply will become contaminated beyond the point where filtration techniques can make it safe for drinking If thls Is all the Information the government has, which solution to reduce pollution is appropriate? Check all that apply 0 0 1 00 10 40 4 QUANTITY s o Imaginc the government has determined that the socially optimal quantity of chemical pollution is 350 mllion tonnes per day Tradable permits Corrective taxes Onc way govcnments can charge tirms for pollution rights is by imposing a per unit tax on emissions. A tax (or price in this case) of per tonne of chemicals emitted will achieve the desired level of utionPaper factories emit chemicals as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a negative externality of paper production. Imagine the Australian government wants to correct this market failure by getting tirms to internalise the cost ot pollution. To do this, the government can charge firms for pollution rights (the right to emit a given quantty of chemicals). The following graph shows the daily demand for pollution rights. Now imagine the Australian government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one tonne of chemicals per day. To achieve the socially optimal quantity of pollution, the government auctions off 350 million pollution permits. Given this quantity of permits, the price for each permit In the market for pollution rights will be Use the graph input tooi to help you answer the following questions. You wil not be graded on any chanes you make to this graphi. Note: Once you enter a value in a white field, thピgraph and any 때 responding amounts in each grey field will change accordin The previous analysis hinges on the government having good information regarding either the demand for pollution permits or the optimal level of pollution (or both). Given that the appropriate policy (tradable permits or corrective taxes) can depend on the available information and the policy goal consider the following scenario Graph Input Tool Daly Demand for Pollution Rights Price Dos per one 450 An environmental study conducted in a particular city suggests that if a chemical plant emits more than 20 million tonnes of chemicals each year, the water supply will become contaminated beyond the point where filtration techniques can make it safe for drinking If thls Is all the Information the government has, which solution to reduce pollution is appropriate? Check all that apply 0 0 1 00 10 40 4 QUANTITY s o Imaginc the government has determined that the socially optimal quantity of chemical pollution is 350 mllion tonnes per day Tradable permits Corrective taxes Onc way govcnments can charge tirms for pollution rights is by imposing a per unit tax on emissions. A tax (or price in this case) of per tonne of chemicals emitted will achieve the desired level of utionPaper factories emit chemicals as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a negative externality of paper production. Imagine the Australian government wants to correct this market failure by getting firms to internalise the cost of pollution. To do this, the govement can charge firms for pollution rights (the right to ernit a given quantity of chemicals). The following graph shows the daily demand for pollution rights. Now imagine the Australian government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one tonne of chemicals per day To achieve the socialy optimal quartty ofpeluden, the govemment autions off 0 minpol.tinpemits. Gien this quarbity of gemits,the price far each permi in the market for pelutbon ights willbe. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Onoe you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly The previous analysis hinges on the government having good information regardinฉ either the demand for pollution permits or the optimal level of pollution (or both). Given that the appropriate policy (tradable permits or corrective taxes) can depend on the available information and the policy goal, consider the following scenario. Graph Input Tool Deily Demand for Pollution Rights An environmental study conducted in a partisular.sity suggests that if a chemical plant emits more than 20 million tonnes of chemicals each year, the water supply will become contaminated beyond the point where tiltration techniques can make it sate tor drinking. Price Dolas per conne) 450 ions ohonnes) If this is all the information the govemment has, which solution to reduce pollution is accrocriate? Check al that aoply Tradable permits Cormrective taves QUANTITY Moncoftarnec) Imagine the govemment has determined that the socially optimal quantity of chemical pollution is 350 million tonnes per day. One way govenments cahe fims for pition rights is by imposin a cuiax emissionsA taxerprice in this case)of s er bone of dhemicals emitted wil achieve the desired level cf polution

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