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Chapter 12: Q.5 (page 293)

Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?

Short Answer

Expert verified

Whenever industries and manufacturers do not comply, they will be banned and forced to leave the industry. The market incentive plan is another technique to establishing a determined technology that has to be cleaner and funded to be employed.

Step by step solution

01

Command-and-control policy :

The enforced environmental policy is directed by command-and-control policy. It depicts a certain form of regulation.

02

Explanation :

The command-and-control strategy is an example of how to create a unified technology that is predetermined and applied. If industries and manufacturers do not comply, they will be banned and forced to leave the industry. The market incentive plan is another technique to establishing a determined technology that has to be cleaner and funded to be employed.

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Most popular questions from this chapter

The state of Colorado requires oil and gas companies who use fracking techniques to return the land to its original condition after the oil and gas extractions. Table 12.9shows the total cost and total benefits (in dollars) of this policy.

Table12.9

Land Restored (in acres)Total CostTotal Benefit
0\(0\)0
100\(20\)140
200\(80\)240
300\(160\)320
400\(280\)380

(a) Calculate the marginal cost and the marginal benefit at each quantity (acre) of land restored. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs and benefits.

b. If we apply marginal analysis, what is the optimal amount of land to be restored?

In the Land of Purity, there is only one form of pollution, called “gunk.” Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose.

a. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis.

b. Which choices display productive efficiency? How can you tell?

c. Which choices show allocative efficiency? How can you tell?

d. In the choice between K and L, can you say which one is better and why?

e. In the choice between K and N, can you say which one is better, and why?

f. If you had to guess, which choice would you think is more likely to represent a command-and- control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?

Is zero pollution an optimal goal? Why or why not?

Technological innovations shift the production

possibility curve. Look at graph you sketched for

Exercise 12.13 Which types of technologies should

a country promote? Should “clean” technologies be

promoted over other technologies? Why or why not?

Show the market for cigarettes in equilibrium,

assuming that there are no laws banning smoking in

public. Label the equilibrium private market price and

quantity as Pm and Qm. Add whatever is needed to the

model to show the impact of the negative externality

from second-hand smoking. (Hint: In this case it is the

consumers, not the sellers, who are creating the negative

externality.) Label the social optimal output and price as

Pe and Qe. On the graph, shade in the deadweight loss at

the market output.
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