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Economics for Managers 

Table of Contents

Solution 1:

Solution 2:

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Solution 4:


Solution 1:

The article “Australia’s rising greenhouse gas emissions” is written by Bourne, Andrew Stock, Will Steffen, Petra Stock, and Louis Brailsford. The article tells regarding the various aspects of greenhouse gas emissions rising in Australia. Major effects are showing in climate change in the environment of Australia. The articles show the rise in emissions which are predictable to endure to enhance without trustworthy and complete weather and energy strategy. The article shows the increase in the emission of greenhouse gases in previous three years which has reached 556.4 MtCO2e since December 2017.

The emissions of greenhouse gases in Australia are close to an all-time high. Different sectors are accountable for increasing releases in Australia. These segments are power, conveyance, stationery vitality, farming, fleeting productions, manufacturing procedures, unwanted, and land use. There is a 33% emission from the power area (Arcot, et. al., 2015). The article shows that Australia’s target for reduction in emission for 2030 is 26-28% to meet the Paris climate contract goals. Australia’s portion in the worldwide carbon financial plan is around 5,500 Mt CO2e.

As per the article, the emissions in Australia are increasing at a high rate which shows in the article that in the upcoming 10 years the carbon budget will be fully exhausted by 2030. If additional global nations accept procedures from Australia then the international temperature will increase to 3 to 4 degrees Celsius. This will generate great challenges for human survival. The article summarises the federal government’s national energy guarantees to reduce 26% emission reduction in the electricity sector. There will also be a 26% reduction in other sectors which is expected according to the article.

The article shows that Australia is not even on path to meet the existing situation of emissions radiation targets for 2030. Australia is not taking essential steps towards the reduction of emissions from different factors (Bandiera, et. al., 2015). Australia is taking steps towards the reduction in emission but the steps are not appropriate with the condition it is facing. Some steps should be taken for the emission reduction, like transport emission and elusive radiations would necessity to be censored by around a third to make subtle changes.

The article described that Stationary energy needs to be cut down by 31%. Emission from and agriculture sector and industrial sector which includes chemical and metal production need to be cut down by 23% and 22% respectively whereas there should be a 5% reduction in waste emission. The article shows the possible reduction in emission which should be followed by Australia. The cost-effective technologies should be used which not cause harm to climate change such as vitality competence, renewable drive, and storing need to be applied in daily life.

These will help in the reduction in the emission of carbon which is harmful to the environment not only for Australia but also for the whole globe. There are technical possibilities for Australia to achieve power generation from renewable sources which will be a secure and reliable power source (Dessaint, et. al., 2017). Also, it will not harm the environment and will keep it safe. But the article describes a low amount of chances or opportunities for speedily decrease emissions from different segments particularly the agriculture sector and fleeting productions in Australia. These are the basic summary of the factors shown in the article of Australia’s growing greenhouse gas emissions.

According to the article on greenhouse gas emission, Different measures have been taken by the central administration of Australia in which they dedicated to the Paris weather arrangement. As a share of this contract, Australia is tackling climate change which is caused by the rising emission of carbon due to different sectors. In this agreement, Australia set an original goal to decrease greenhouse gas emissions by 26-28% by 2030. This target is set by the centralized management which will assistance in controlling the climate change occurrence in Australia whose side effects are showing in the form of bushfire in 2019. The controlling of greenhouse emissions from different sectors of Australia will help in achieving this goal which now seems to be impossible for a rapid reduction in emission.

The electricity sectors are the major source of greenhouse gas emission, thus the government needs to set a target for reduction in emissions sector-wise. The use of renewable energy sources can majorly help the Australian government to control the emission. The target for reduction in emission is a difficult task that cannot be rapidly reduced in upcoming years. There is a requirement for strategic planning which will help in discovering new paths in the way of environment protection so cases like a bushfire in Australia will not occur in future times.

Solution 2:

a) If society wants to reduce overall emission by a certain amount, why is it efficient to have different amounts of reduction at different firms?

Society always needs to decrease the emission as it creates a negative impact on their environment and generates a bad impact on their human beings. Society work on reducing the level of emission gas at certain as it can eliminate the high greenhouse gas emission correctly. It is also effectual to have a dissimilar amount of decrease at various companies as the cost of dropping emission differs across the companies. If they were all developed to reduces the smog by the similar quantity, so that the value would be little at some organization and prohibitive at others, also magnificent a great weight at the whole level (Dittmar, et. al., 2015). The carbon-neutral status can be reached in two ways that include balancing carbon dioxide emissions with carbon removal beyond the natural procedures. Another is removing the carbon dioxide from the environment which creates fresh air in the country.

b) Economics usually prefer corrective taxes over regulations as a way to deal with greenhouse gas emissions. Can you explain why?

Corrective taxation is regularly used by the country government to regulating and operate the prices of various products and services in the economy, which directly affect such people who require correction. In the case, the corrective tax is levied based on per unit and it could be considered in dollars per unit of emission so such who can reduce the emission gas at a lower price than taxes would automatically decline emission without paying any tax rate. Along with this, such firms who cannot reduce the emission at a decreased rate than the tax will pay and create a negative effect on human population health as well. It effectively puts a corrective price over the greenhouse emission gas (Hirschey, et. al., 2016).

Most of the economist would prefer the corrective tax as it is effective over the regulation in reducing whole emission gas. The Australian government can gain whatever level of greenhouse gas emission wants to set the taxes at an accurate level. it is analyzed that the higher tax, the increased reduction in emission gas automatically. If the tax is high then the industries will close down their business operations, this will reduce the emission gas level at zero. Although, both the corrective taxes and regulations are capable of reduces the emission gas and tax achieving this goal effectively. The country regulation needs each factory to reduces the emission by a similar amount, but equal decrement is not required for the least costly method for reduces the greenhouse gasses.

c) Using a diagram for the market for emissions, illustrate the effect of this development on the demand for emissions rights. What is the effect of a carbon tax on the price and quantity of emissions? Explain.

Carbon dioxide is the main greenhouse gas that contributes to climate change and it is the level that has enhanced from human activity and functions, promoting incidents such as fossils fuel combustion in a better manner. The main technology which helps in reducing carbon dioxide emissions is carbon capture storage.

Pollution permit

Figure 1: Pollution permit, 2020

(Source: Pollution permit, 2020)

As per the above diagram, it describes the development of machinery for regulatory greenhouse gas emissions. The markets for emission diagrams show the effect on the market and it is indicated that gas emission creates an influence on the environment as well. Most of the customers will convert more energy-efficient; additional, it is decreasing the conservatory gas release. Taxes allow the industries to analyze cost-effective methods and approaches to eliminate the issue of carbon emission (Houdek, et. al., 2017). It helps in enhancing the economic growth level of Australia. The carbon tax affects the quantity and price of emission as when a price is put on carbon emission then it creates an income stream. For example, the carbon tax affects the price and quantity effectively in which such industries or factories create pollution beyond the capacity so they need to pay the price as per the guidelines and regulations set by the government. If they do not pay the fees, then they will be punishable in another way by government authority.

d) Illustrate the effects of an increase in carbon tax on emissions in the short run and the long run. Explain.

The carbon tax majorly effects the emission in the short term in which the government could promote the lower wages results by returning the carbon tax to the community with the help of reducing the other taxes. In the long run, the increased price would also lead to high rates or emissions-intensive products and services which would motivate the households to use limited and gain more goods and facilities (Kreps, 2019).

Solution 3:

A carbon tax is a tax that aims to pay for carbon pollution by persons and businesses according to the communal price of carbon greenhouse gasses. This tax is used for reducing pollution and encourages people and various firms to stand as environmentally friendly alternatives among society. Different factors show various aspects of the carbon tax like some according to some critic’s carbon tax increase the charges for corporate and also decrease the levels of asset and financial development (Masiukiewicz, 2018). There are different pros and cons of the carbon tax which are as follows:

Pros of a carbon tax:

  • A carbon tax creates the polluters pay for the external rate of emission which means whoever contributes to the polluting of the environment will have to pay for its damage in monetary terms. This will create awareness and also immerse fear in people to stop them from polluting the environment by different means.
  • Theoretically, it enhances social efficiency in a great manner as the people have to fully pay for the social cost. This pro is only applicable to the theory of carbon tax because it is not seen on the ground level in the society.
  • As firms have to pay the carbon tax, which eventually results in a rise in revenue for the government. Then the government can use these revenues for the mitigation strategies and actions for environmental pollution.
  • Carbon taxpayers which are firms and individuals will be encouraged to look for alternatives which will not cause pollution, so they do not have to pay a carbon tax.
  • This tax also decreases environmental charges that are related with excessive carbon pollution in the environment. This is a major advantage of a carbon tax for the authority to take major steps for the mitigation of GGE.

Cons of a carbon tax:

  • Business firms claim that higher tax in business discourages the investment and economic growth of the company. This is a major disadvantage which can affect the growth and development of companies and country by giving carbon tax.
  • A carbon tax can inspire tax elusion under which companies can pollute the environment secretly to avoid tax payment. This will increase the emission on a higher rate which will not be on government records.
  • The taxation calculation will become complicated under the carbon tax liable on individuals and firms.
  • There will be an increase in administration costs because of measuring pollution and the collection of a carbon tax.
  • The business firms can take steps towards leaving the country to another nation that do not charge carbon tax which will be beneficial for business firms.

There are various pros and cons of carbon tax policy. In Australia, the major cause of the increase in GGE is because of diverse segments. These sectors include power, transportation, motionless liveliness, cultivation, fugitive releases, business procedures, and waste energy divisions. Thus, a carbon tax is a moral strategy for reducing GGE in Australia as the firms and individuals will come under this policy. These areas are primarily accountable for high GGE, so the carbon tax on these sectors will encourage them to choose other alternatives like renewable energy sources (Mion, et. al., 2016). The renewable energy sources are important as they do not pollute the environment as well as can be used at infinity level. They will never end. The people of Australia will come closer to the social status if the carbon tax implied in industries and different sectors.

The revenues of the federal government of Australia will increase with the help of a carbon tax. This increased revenue can be used to mitigate greenhouse gas emission, providing subsidies to the firms or individuals who are opting for alternatives such as green electricity, and these revenues can also be used to repair the damages caused to the environment of Australia by pollution. This increase in the tax can also be used for reducing other taxes in Australia to help people in helping the environment. Australia will see the improvement in the environment with the application of carbon taxes to organizations. This tax will reduce pollution from firms and lower the impact of pollution on the environment. Australia will improve its beneficiary with the carbon tax implication on the firms and persons.

Solution 4:

New Zealand and South Korea also executed a market-based method for controlling emissions such as carbon taxes and cap-and-trade schemes. A carbon tax is a tax in which entities and businesses need to pay for the occupied community charge of carbon effluence. Similarly, the cap and profession system used in the decrease of emissions. It is a system that is designed for reducing pollution in the atmosphere. These are the major policies that are being used by New Zealand and South Korea just like Australia (Putni?š, et. al., 2015). These policies are proved to be effective for both countries for reducing carbon or greenhouse gas emission in the environment.

In South Korea, the carbon tax charges cover 77% of Korean ETS. This high carbon tax delivery in South Korea, help in handling the changes in the environment, which are harmful to humankind. There are different kinds of factors which help in the reduction of emission from various sectors. The carbon tax is proved to be effective in carbon gas reduction in the environment. The companies and individuals are cheered to look for alternative paths for their working criteria like renewable energy sources which do not harm the environment by deadly emission of greenhouse gases into the atmosphere. The cap and trade scheme is not that convincing in terms of effectiveness on the decline of carbon gases emission in the atmosphere. These are not effective in the remedy for the rapid decrease of emission of greenhouse gases.

In New Zealand, people pay an extra amount of NZ$2.90 as per carbon tax. This is the extra expense for individuals and firms which harm the environment by the emission of greenhouse gases in the environment. This release is very harmful to the atmosphere and the whole humankind. Climate changes are frequently shown in different parts of the world. The melting of ice caps in North and South Pole, melting of big glacier mountains, bushfire in Australia, Amazon forests’ fire are all side effects of weather alteration due to global warming which is affected by the discharge of greenhouse gases in the atmosphere.

New Zealand is fighting towards climate change by charging carbon tax which has proved to be operative in the decrease of emissions (Silverman, 2017). Cap and trade policy is not as effective in restricting the emission of greenhouse gases in the environment. These schemes are not proved to be helpful because of the bad coordination of different firms for these schemes. The government cannot increase its revenue by this scheme as in carbon tax which helps in the repair of previous environmental damages and provides a subsidy to firms who are opting for alternative energy sources that do not cause harm to the environment.

Australia’s major source for greenhouse gases is various kinds of industries that emit poisonous gases. For dropping the emission of greenhouse gases in the environment, the best policy is carbon tax implication in Australia. A carbon tax is a strategy in which individuals and businesses had to pay tax amounts for social carbon pollution caused by them. Under this policy, Australia is working hard to reduce the rate of carbon emission from different kinds of industries. The carbon taxation in Australia is encouraging many firms to opt the way of renewable energy to do their work.

There are different advantages of using renewable energy in different working areas. This will help in a rapid reduction of GGE in Australia. The federal government of Australia can earn a large quantity of income with the carbon tax policy. This revenue can be used in different manners to fulfil a common objective that is to diminish the emission percent of greenhouse gases in Australia. The previous damages caused to the environment by the emission of gases in Australia can be repaired by following different strategies of mitigation and reduction. The government of Australia can also offer a subsidy to the firms and individuals who are changing their way of business by opting for alternatives.

Renewable energy sources equipment can be provided to these firms and individuals who intend to help the environment. The social effects will be increased in Australia by this policy. Awareness about the environment and different aspects of it will be helpful for Australia as a responsible country. This policy is most effective for Australia to moderate carbon releases in the atmosphere (van Dalen, et. al., 2018). The cap and profession structure is also used in Australia for the reduction of emission but it could not be proved to be helpful and effective in comparison with the carbon tax policy. The amount that firms and individuals need to pay will teach them a lesson to change their ways of doing work, as in such a manner that will not harm the atmosphere and result in climate change situations.

References for Economics for Managers

Arcot, S., Fluck, Z., Gaspar, J.M. and Hege, U., 2015. Fund managers under pressure: Rationale and determinants of secondary buyouts. Journal of Financial Economics, 115(1), pp.102-135.

Bandiera, O., Guiso, L., Prat, A. and Sadun, R., 2015. Matching firms, managers, and incentives. Journal of Labor Economics, 33(3), pp.623-681.

Dessaint, O. and Matray, A., 2017. Do managers overreact to salient risks? Evidence from hurricane strikes. Journal of Financial Economics, 126(1), pp.97-121.

Dittmar, A. and Field, L.C., 2015. Can managers time the market? Evidence using repurchase price data. Journal of Financial Economics, 115(2), pp.261-282.

Hirschey, M. and Bentzen, E., 2016. Managerial economics. Cengage Learning.

Houdek, P. and Koblovský, P., 2017. Behavioural economics of organization: employees and managers.

Kreps, D.M., 2019. Microeconomics for managers. Princeton University Press.

Masiukiewicz, P., 2018. Appropriation Economics versus Managers’ Ethics. Journal of Applied Management and Investments, 7(3), pp.147-153.

Mion, G., Opromolla, L.D. and Sforza, A., 2016. The diffusion of knowledge via managers' mobility.

Putni?š, T.J. and Sauka, A., 2015. Measuring the shadow economy using company managers. Journal of Comparative Economics, 43(2), pp.471-490.

Silverman, B.S., 2017. Organizational economics. The Blackwell companion to organizations, pp.467-493.

van Dalen, H.P. and Henkens, K., 2018. Why demotion of older workers is a no-go area for managers. The International Journal of Human Resource Manssagement, 29(15), pp.2303-2329.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Economics Assignment Help

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