Suppose MD=4E and MAC=90-2E characterize a pollution problem. If there is a liability law in place, what is the likely amount of compensation paid by the polluter(s) to those who suffer from pollution damages. Note that likely outcomes means equilibrium outcomes.

Question

Suppose MD=4E and MAC=90-2E characterize a pollution problem. If there is a liability law in place, what is the likely amount of compensation paid by the polluter(s) to those who suffer from pollution damages. Note that likely outcomes means equilibrium outcomes.

BlackTom AI · Accepted Answer

Polluter sets emissions where marginal abatement cost equals marginal damage: MAC = MD.

1) Relevant concepts
- MAC (marginal abatement cost) is the private cost to the polluter of reducing one more unit of emissions.
- MD (marginal damage) is the incremental harm to victims from an additional unit of emissions.
- Under strict liability, the polluter internalizes MD by paying damages, so they choose emissions E where MAC = MD. Total compensation equals total damages = the integral (area) under the MD curve from 0 to the equilibrium E.

2) Step-by-step reasoning
Set MAC = MD:
90 − 2E = 4E

3) Algebra (intermediate steps)
90 − 2E = 4E
90 = 6E
E = 90 / 6
E = 15

4) Compute total compensation (total damage)
MD(E) = 4E so total damage D(E) = ∫0^E 4e de = 2E^2.
Evaluate at E = 15:
D(15) = 2 × (15)^2 = 2 × 225 = 450.

Why this is the compensation: with liability the polluter pays the full damages caused by emissions; total damages at the chosen E equal the area under MD from 0 to 15, which we computed as 450.

5) Why other choices are incorrect
- 0: would be the compensation only if equilibrium emissions were zero; here equilibrium E = 15, so damages > 0.
- 2025 and 4050: these are not the area under MD for the equilibrium E. For example, 2025 = 45^2 and 4050 = 9 × 450; neither arises from correctly solving MAC = MD and integrating MD. The correct integration yields 450.

6) Conclusion
Total compensation paid by the polluter in equilibrium is 450, which matches the provided correct answer.

Suppose MD=4E and MAC=90-2E characterize a pollution problem. If there is a liability law in place, what is the likely amount of compensation paid by the polluter(s) to those who suffer from pollution damages. Note that likely outcomes means equilibrium outcomes.单项选择题

类似问题

Using surface water for irrigation purposes and disturbing local species through the noise and light produced at a processing site both impact biodiversity directly. In relation to shadow carbon pricing, which of the following is incorrect?

Which of the following is an example of quasi-option value?

Suppose MD=4E and MAC=90-2E characterize a pollution problem. If there is a liability law in place, what is its likely compliance cost? Note that likely outcome means equilibrium outcome.

Suppose MD=4E and MAC=90-2E characterize a pollution problem. If there is a liability law in place and, what is its likely compliance cost faced by the polluter at E=45?

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单