Quiz 17: Externalities, the Environment, and Natural Resources


One would expect that marine and air is the major types of pollution in small African villages. The air pollution is mainly caused by industry sector in South Africa. In South Africa, Electricity is mainly produced by using coal which eventually leads to increase carbon emission. In a city in India, one would expect that garbage pollution, air pollution, and water pollution are the major types of pollution. Air and water pollution is normally caused by the growing industrialization. A significant rise in population also leads to an increase in the garbage pollution. China is considered as one of the most populated countries in the world. Air pollution, organic pollution, water pollution and the wastage pollution are the major types of pollution in the china. One would expect that air pollution, and garbage pollution is the major types of pollution in the city of New York. Garbage pollution is mainly caused by excessive use of plastic bottles. Most of the people in the New York City prefer bottled water than tap water.

The equilibrium occurs where quantity demanded equals quantity supply. The following is a table which indicates quantity demanded and quantity supplied. img The above table shows that the equilibrium price is $8 considering that at this price quantity demanded equals quantity supplied. The following is a graphical representation of above given table. img The above figure indicates the equilibrium price and the quality. The equilibrium price is $8 and the quantity is 90 units as indicated in the above graph. Production of one unit creates 10 pounds of emission. The equilibrium output is 90 units of quantity. Thus, the equilibrium quantity will tend to emit 900 pounds img units of pollution.

(a) Imposition of taxes leads to increase the burden of taxes on producers. Producers are likely to reduce the production goods due to taxes. Reduction in the production causes a decrease in the pollution emitted. One would decide the size of tax considering its effect on the pollution emission. Higher taxes would be imposed on the more hazardous emissions. (b) One would advice to locate the municipal electricity plant out of city area. This would help to reduce the effects of smoke caused by a municipal electricity plant. One would also advice to use alternative method which will emit less smoke to produce electricity. (c) One would not use the same tax rate in densely and sparsely settled areas. Relatively higher taxes would be imposed in densely area rather than sparsely settled areas. In densely area, Emission of pollution affects more on the health of people. In sparsely settled areas, the effects are relatively less than populated area. One would require the information regarding the negative effects of pollution on the health of people. Information regarding the effects of imposition of taxes is also required before drawing any conclusion.

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