Review Questions

General Model of Pollution Control

1.     What information does a marginal damage function convey?

2.     What information does a marginal abatement cost function convey?

3.     Why does efficiency frequently lead to solutions in which some pollution remains?

Federal Air Pollution Control Policy / CO2 Emissions Trading

1.     How does the Clean Air Act (CAA) define attainment and non-attainment counties?

2.     What does the term “standards” mean under the CAA?

3.     How are standards for specific pollutants determined under the CAA?

4.     What regulatory mechanisms kick in once a county is declared non-attainment?

5.     What does the data reviewed in class indicate about the affect the CAA has on the geographic distribution of production?

6.     What pollutant is the primary cause of Acid Rain?  Identify the economic activity that is a large source of the pollutant. 

7.     Why was the county-based emphasis of the original Clean Air Act ineffective in addressing the Acid Rain problem?

8.     Why is Acid Rain more of a problem in the Northeast than in the rest of the country?

9.     Describe the pollution trading program implemented by the EPA to deal with Acid Rain.

10.   How is pollution trading supposed to decrease the total social cost of abating pollution?

11.   What is meant by “banking” pollution credits?  How does banking influence the firm’s pollution abatement and trading behavior?

Air Quality in Los Angeles

1.     Describe a temperature inversion.  What is the relationship between temperature inversions and air quality?

2.     Describe the air quality alert system in Los Angeles County

3.     What is the SCAQMD and what is its role?

 

Efficiency and Equity in Pollution Control

1.     What is the difference between the equity and efficiency of public policy?

2.     Be able to evaluate data quantifying the equity and efficiency of alternative environmental policies.

3.     Be able to interpret statistics on the relationship between demographics and the geography of emissions in Los Angeles County.

 

Review Problem:

Below are the marginal abatement costs for three firms.

 

untable-5 

 

A.           What is the cost for each firm to reduce emissions from 6 to 5 tons?   From 5 to 4 tons?

B.           What is the total cost of each firm decreasing its emissions down to 5 tons?  4 tons?

C.          If each firm were charged $8 tax per pound of emissions, how many tons would each firm emit per week?

D.          Why would the tax generate less abatement cost across the firms than an emissions standard requiring each firm to decrease emissions by 5 tons/week?

 

Suppose each firm were given 5 tons of tradable rights.

E.           If Firm 1 transacted with Firm 3, which would likely be the buyer?

F.            What would be the possible terms of trade?

The Global Environment

1.     What role does the ozone layer in the upper atmosphere play?

 

2.     What are the external costs of the economic activity that diminishes the ozone layer?

 

3.     What gas primarily contributes to the greenhouse effect?

 

4.     What human activities are contributing to global warming?

 

5.     What are some of the ecological effects of global warming?

 

6.     Be able to interpret the relationship:

 

A country’s total CO2 production = Population × GDP/Pop × Energy/GDP × CO2/Energy

 

7.      How did trade in used cars between Mexico and the US contribute to an increase in greenhouse gas emissions?