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Homework answers / question archive / An externality can be a cost or benefit arising from the production of a good that falls upon A) consumers but not producers
An externality can be a cost or benefit arising from the production of a good that falls upon
A) consumers but not producers.
B) producers but not consumers.
C) both the consumer and the producer.
D) someone other than the consumer or producer.
E) no one, so it goes unpaid.
11) A problem with pollution charges or taxes as a solution to pollution is that
A) people don't want the government to regulate industry.
B) the necessary information about the polluting industry is costly and usually unavailable.
C) taxes are already too high.
D) pollution would still continue.
E) the producers do not want the property right to their pollution.
12) Cap-and-trade refers to
A) capping emissions and issuing tradeable emissions permits.
B) capping revenue from selling emissions permits.
C) countries trading fishing rights in international waters.
D) capping taxes on firms that engage in international trade.
E) capping the benefits gained from pollution controls.
13) If a pollution tax in a market with an external cost changes the market so that it produces the efficient level of output, which of the following occurs? i. The supply curve shifts leftward. ii. The price increases. iii. The quantity produced decreases.
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii, and iii
Both the producer and the consumer. Externality will be both positive and negative which is a result from an economic activity and this external cost will be occurred for a third party. This party will be sometime a part of the resulting activity or not. This cost will be incurred by both consumer and producer. An example for consumer good is the consumption of cigarettes or smoking in public places will affect the people who stand near to the smoker. In case of production, pollution is a form of negative externality. This will affect the future development and production level. These externalities will not affect consumers only and producers only.
2. Pollution will still continue. The pollution taxes or charges were applied to reduce the level of pollution occurred during the time of production. This aims to reduce the emission of gases or other harmful gases which cause health issues. But the tax rates increased day by day without any reduction in the level of pollution. But the existence of pollution will remain for long period in our economy. The proper government regulation through this kind of measures was focused to reduce these social issues. But the producers are ready to pay this tax rates without make a control over the pollution.
3. Capping emissions and issuing tradeable emission permits. The cap and trade policy was a government regulation which aimed to reduce the emission of poisonous gas over the economy. This will be in the form of incentives to make a benchmark over the emissions. This policy will make a limit over the firms like who run power plants. This will reduce the level of pollution and also helps to formulate proper policies to reduce the level of global warming. Countries that trade fishing in international water will get permission from international agencies to take proper measures. It will not connect with the cap and trade policies. The government provide more incentives to create the control.
4. i, ii, iii. The pollution tax will shifts the supply curve to left, price increases at situation and the quantity produced will fall down. The firm have to pay additional tax over the level of pollution. This will increase the cost of production and thus the firms total production level will come down. This fall in supply will increase the price of the goods and services that the firms produced.
