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Related Flashcards
Cards In This Set
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(T/F) Net Benefits are maximized when total benefit = total cost
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False
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A policy that requires power plants to release no more than 3.5 lbs of polluntant per ton of coal burned is an example of
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A performance standard
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Element of property rights violated when there is an externality
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Exclusivity
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Least-cost allocation of pollution abatement activities across firms is one where
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MC of abatement for last unit of pollution reduced is equal across firms
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If price is above the market clearing price (P*), then we have a situation of _____ and there will be a _____ pressure on price until it returns to the equilibrium price
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Excess supply
Downward |
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Hot-spot
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Area of concentrated pollution
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How might you avoid hot-spots when designing a tradable permit system
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Prohibit some tradesexchange rate for allowances
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4 elements of property rights
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1. Universal2. Exclusive3. Transferrable 4. Enforceable
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Universal element of property rights
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All resources must be owned & All entitlements specified
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Exclusive element property rights
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All benefits & costs incurred must go to owner
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Transferrable element property rights
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Can transfer rights
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Enforceable element of property rights
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(Secure) No one can take away or use in a way not desired by owner
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For a policy to be a fully socially optimal pollution control policy, what must be true?
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Pollution goal must be set where NB are maximized and the goal must be achieved at lowest possible cost
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When considering optimal level of pollution abatement, the equimarginal principle indicates
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The MB of pollution abatement must equal MC
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A tax policy is _____
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Efficientnot preferred by firms b/c too expensive
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