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Environmental Economics Problem Set
Typology: Cheat Sheet
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Static
Equilibrium
14
c.
4tL¥
4+
%
=
20
2
CS
20
ZQ
=
^
16
/
Ps
2
14
=
=
=
p
4 MB
4
b)
=
42 × 16 × 4 total
welfare
CS
= 16 A-
&
☆
total
surplus
damage
=
Mcp
Mcd
=
=
(4+40)+
damage
=
M =l0t4#
=
48-24=
g)
MCs
=P = 10+
Mcp
MB
=
=
14
28
p=
-20+
=
t
2k
20
Pp 28
to
= 40+
[
PS
Q
P = 22
Qp
h
CS =
=
=
CS + Ps
=
ps
=
18
=
Mcp
net
gain
= 6 × 3
28
=
0,20)
)
( 0116
)
.
) Qs
MB
=
,
which is
Pigouvian
tax
is
set
the
cost
the
negative
externality
.
,
Static Market Equilibrium
Externalities
30
=
za
D: D= 30
ZQ or 0=
:
=
p
= 20
a)
30 -2A
= 2+
2+5 Q
=
30 ¥
=
Q=
15
p
=
22
0=
or
a s
30
CS,
)Pp
=
2
total social welfare
=
=
( 4,
)
plant
earns
pollutes
socially
efficient
if
company
paid $ 1200
to
lake.
profit
then
WOO
$ 1200
1200T$ 1500
=
pollution
is
unregulated
canoe
's
drop
≥
The shell corn
continue to make
$ 2000 in
profit
.
plant
be
forced
to
their
pollution
the
company
has
little to
cleaning
the
pollution
themselves
,
putting
the
burden of
cleaning
on
the canoe
company if
negotiations
are allowed .