The production from the companies in an industry is assumed to give rise to emissions that pollute the environment and t

[answerhappygod]

The Production From The Companies In An Industry Is Assumed To Give Rise To Emissions That Pollute The Environment And T 1 (167.97 KiB) Viewed 58 times

The production from the companies in an industry is assumed to give rise to emissions that pollute the environment and thus to external costs for the surrounding society. Figure 1 illustrates the situation. kr.30 28+ 26 MEC 24 22 20 18 16 14 12 10 8 6 4 MAC 2 04 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 380 400 420 440 460 480 U Figure 1 Along the horizontal axis, the industry's total emissions are measured, U. The curve marked 'MEC' indicates itmarginalexternal pollution cost, MEC, while the curve marked 'MAC' indicates the industrymarginalreduction or purification costs (in English 'marginal abatement cost'), MAC, both as a function of the discharge and both measured in DKK. The formulas for resp. MEC and MAC are: 1 MEC (U) = (1) Tow and E MAC (U = 30- 1 U 16 (2) 2 In a situation where the industry's emissions are not sought to be regulated influenced) by the authorities, the emissions become Us=480, because it is costly for companies to reduce emissions from here. That is, while the emission is measured from zero and to the right along the horizontal axis, the emission is measured the reductionfrom 480 and to the left. If, for example, the emission is 300, then the emission isthe reduction480 - 300 = 180. 2.1 Briefly explain the concept of externality. Does it seem reasonable in a pollution context such as here to assume that the marginal external cost, MEC, is growing (rather than, for example, constant) in emissions?