Krugman and Wells Microeconomics

CHAPTER 17 3. a. Capturing and transforming methane liquid behaves like a Pigouvian tax by creating little pollution. A Pigouvian tax will tax the methane bad up that is emitted into the air which will ca drop the farmers to want to use less methane drift, so they dont have to requital as much tax. Capturing the methane gas and transforming it reduces the amount of gas released into the gentle wind; the said(prenominal) results would occur with the Pigouvian tax. b. With some farmers being satisfactory to transform methane gas into electricity at a visit localise than separate farmers this gives incentive for these farmers to produce electricity. The farmers transforming methane into electricity will save bills on their utility bill and they will be able to run a profit off of the electricity they sell. The farmers that pauperism to develop the methane gas may be able to purchase the gas from separate farmers at a overturn rate than from other co mpanies. This system will lead to an efficient apportioning of emissions reduction among the farmers. 6. a. At the current level of consumption the best sell price of a pack of cigarettes in each situate is the CDCs estimate of smoking monetary value in 2006. The current price in each state is lower than their optimum price.

The current level of consumption is too pass due to the fact that smokers are paying less than the optimum price of smoking. b. No. The current taxes are not treated to optimal level, because the price of cigarettes with tax is less than the fond comprise of smoking. c. If the CDCs estim ate for the cost of smoking does not misce! llany with an increase in the price of cigarettes, ten the correct size of it of an additional Pigouvian tax should equal the difference between the affectionate cost and the individual cost. California-- 15.10 - 4.40= $10.70. New York-- 21.91 5.82= $16.09. Florida10.14 3.80= $6.34. Texas9.94 4.76= $5.18. Ohio9.19 4.60= $4.59. 12. a. The transaction cost is adenoidal due to the time and cost of taking two antiquated age to...If you want to get a full essay, tack it on our website: BestEssayCheap.com

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