Week 2 Notes
Week 2 Notes
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This 3 page Class Notes was uploaded by Lori Holte on Saturday October 15, 2016. The Class Notes belongs to at Virginia Polytechnic Institute and State University taught by in Fall 2016. Since its upload, it has received 3 views.
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Date Created: 10/15/16
8/29/16 Concept of optimality; Most cost curves are U-shaped (economics of scale) Externality= some of the benefits or costs are imposed on an innocent 3 party o Solution: internalize (get producer to pass on the true costs to consumer) Sum of margins= TOTAL Major issue in economics: value of human life 8/31/16 Constantly seeking out optimality in life Most cost-effective way is to have some prevention and some cleanup 9/2/16 Burn coal: machine to capture gases before they hit atmosphere There is an optimal level of pollution in the environment Clean Air Act – major environmental law; renewal 1990: senators and congressmen listened to an economist offer suggestions o Financial incentive to increase green activity o Market will allocate more environmentally friendly practices Pollution permits: o SO2 permits: each one entitles owner to emit 1 ton SO2 per year o At the end of the year each coal-burning utility plant must have purchased at least as many permits as tons of SO2 emitted that year o Fine: $2,000 per ton over + that many tons (over) deducted from its allowance the next year o No cheating: EMU – Emissions Monitoring Unit (99.99% accuracy) – connected to EPA o Permits are transferrable/ marketable during the year (plants can sell to each other – surplus vs shortage) o Bankable for next year o Anyone can buy permits (not just utility plants) NAAQS – National Ambient Air Quality Standards Airsheds: something goes into air – where it goes In each NAAQS: medical scientific advisory board that sets annual limit of tons of SO2 emitted into atmosphere (optimal #) o SO2 – respiratory pulmonary problems, skin diseases, etc Ex) 40,000 split between 4 plants: o 10,000 each – communists (Mike) o Let them compete for permits o If the most efficient and greenest plant bought all permits, then older plants could upgrade and just not pollute o Efficient plant could raise price of permits to sell incentive for upgrades Utility plant could sell fly ash for other uses – artificial fishing reefs * every 5 years, medical scientific board comes together and creates new plan: o Adjust # of permits – sell fewer o If price of permits goes up, cost of electricity goes up o Electric bills go up use less power/ conserve electricity o Cleaner alternative fuel
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