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Chapter 12: Q 27. (page 297)

In the tradeoff between economic output and environmental protection, what do the combinations on the production possibility curve represent?

Short Answer

Expert verified

In the tradeoff between economic output and environmental protection, the combinations on the production possibility curve represent that in order to get one unit of a commodity, we have to sacrifice one unit of the other commodity.

Step by step solution

01

Step 1. Economic output and environmental protection.

Economic output is the total value of goods and services produced in an economy.

Environmental protection is a practice of conserving the natural environment for the benefit of humans and environment.

02

Step 2. The combinations of the production possibility frontier.

In the tradeoff between economic output and environmental protection, the combinations on the production possibility curve represent that in order to get one unit of a commodity, we have to sacrifice one unit of the other commodity.

In the diagram, the PPF shows the tradeoff between economic output and environmental protection. On point A, we prefer a high level of economic output but the lower level of economic protection and so on.

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Most popular questions from this chapter

Consider the case of global environmental problems that spill across international borders as a prisoner’s dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can choose whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If

one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally

between the two countries.

a. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the

environment.

Identify whether the market supply curve will shift right or left or will stay the same for the following:

a. Firms in an industry are required to pay a fine for their carbon dioxide emissions.

b. Companies are sued for polluting the water in a river.

c. Power plants in a specific city are not required to address the impact of their air quality emissions.

d. Companies that use fracking to remove oil and gas from rock are required to clean up the damage.

What are the economic tradeoffs between low-income and high-income countries in international conferences on global environmental damage?

What is a marketable permit and what incentive does it provide for a firm to account for external costs?

What are better-defined property rights and what incentive do they provide to account for external costs?
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