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 foul up that is emitted into the air which will cause the farmers to want to use less methane gas, so they dont have to pay as much tax. Capturing the methane gas and transforming it reduces the amount of gas released into the atmosphere; 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 other 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 make a profit off of the electricity they sell. The farmers that pauperism to acquire the methane gas may be able to purchase the gas from other farmers at a lower rate than from other companies. This system will lead to an efficient apportioning of emissions reduction among the farmers.



6.

a. At the current level of consumption the best retail price of a pack of cigarettes in each state 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 last due to the fact that smokers are paying less than the optimal 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 cost of smoking.

c. If the CDCs estimate for the cost of smoking does not potpourri 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 social cost and the individual cost.
California-- 15.10 - 4.40= $10.70. New York-- 21.91 5.82= $16.09. Floridaâ€"10.14 3.80= $6.34. Texasâ€"9.94 4.76= $5.18. Ohioâ€"9.19 4.60= $4.59.

12.
a. The transaction cost is high-pitched due to the time and cost of taking two old age to...If you want to get a full essay, order it on our website: Orderessay



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