Negative Externalties

CHAPTER 5|Externalities, Environmental Policy, and Public Goods SOLUTIONS TO END-OF-CHAPTER EXERCISES ANSWERS TO THINKING CRITICALLY QUESTIONS 1. A cytosine tax faces the same difficulty as a suffer scheme. With a permit scheme the government could issue similarly many permits, thus causing the price of the permits to be in any case low and little coulomb reduction to take place. Likewise, if the coulomb tax is set at a low fair to middling level, it may be cheaper for electricity producers to continue burning combust and pay the tax rather than to switch production to a less carbon-emitting fuel. 2. A carbon tax would generate revenue. Tradable carbon permits would generate no revenue if they are given past to electricity producers. However, if the permits are auctioned, then the government could raise as much revenue as a carbon tax. | | | |5.1 |Externalities and sparing Efficiency | | |Learning Objective: Identify examples of positive and blackball externalities and use graphs to show how externalities affect | | |economic efficiency.

| | | | | | | Review Questions 1.1An externality is a benefit or cost that affects someone who is non directly involved in the production or outlay of a good or service. Examples of positive externalities include a) the benefits accredited by a passerby... If you want to get a large essay, order it on our website: Orderessay

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