The Table Below Shows the Demand for Pollution Permits to Emit

question 102

Essay

The table below shows the demand for pollution permits to emit hydrocarbons in a particular industrial park which are sold by the government. Each permit allows the owner to release 1 tonne of pollutants into the atmosphere. $$\begin{array} { c c } \hline \text { Price per Pollution Permit } & \text { Quantity of Permits } \\\hline \$ 10 & 2000 \\9 & 2500 \\8 & 3000 \\7 & 3500 \\6 & 4000 \\5 & 4500 \\4 & 5000 \\\hline\end{array}$$ a) If no fee for a pollution permit were charged, and assuming a straight-line demand curve, what quantity of pollutants would be discharged into the atmosphere?
b) Suppose government were to set a fee of $6 per permit. What quantity of pollutants would now be dumped and what would be the revenue of government.
c) Suppose that new technology allows for a significant reduction in hydrocarbons at a relatively low cost so that the demand for permits drops by 500 tonnes. Assuming that government holds the permit fee at $6, what quantity of pollutants would now be dumped, and what would be the total revenue received by government?
d) After the change of demand in c), what would happen if instead of maintaining the fee at $6, government wants to maintain the same level of pollutants as in b). What fee would have to be charged and what would be the new revenue?

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Definitions:

Attention-Deficit/Hyperactivity Disorder

A neurodevelopmental disorder characterized by difficulties in maintaining attention and/or hyperactive and impulsive behavior.

Juvenile Delinquent Behavior

Conduct by a young person, typically under the age of 18, which is illegal or antisocial.

Institutionalization

The process by which individuals are placed or maintained in an institutional setting, such as a hospital or prison, which can impact their behaviors and attitudes.

Relational Aggression

A type of aggression in which harm is caused through manipulation or damage to relationships or social standing, rather than through physical violence.