Provide an example of an environmental tax- Microeconomics
1.Provide an example of an environmental tax or marketable permit instrument that has been used in Canada. Evaluate the instrument in terms of its efficiency (or cost-effectiveness), equity, enforceability, and incentives created for polluters to innovate.
2. Suppose the demand for a product is P = 100 – ½ Q and the supply of virgin inputs is 20 units. The marginal cost curve for recycled inputs is r = Q/4. Compute the socially efficient output level, the use of recycled inputs, and the efficient recycling ratio. Recompute all these under the following changes (take them one at a time) and compare them to the original case.
Demand falls to 80 – ½ Q
The MC curve for recycling inputs becomes r = Q/6
The supply curve for virgin inputs increases to 30.
