• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

IB Economics Commentary - Australia MPs Pass Carbon Tax The Guardian October 12, 2011

Extracts from this document...

Introduction

The Australian government will bring in one of the world's biggest carbon emissions trading schemes after MPs passed two bills by senators that are expected to vote into law in November. A carbon tax is an environmental tax levied on the carbon content of fuels. A negative externality of production occurs when the production of a good or service creates external costs that are damaging to third parties. This is mainly related to the environmental problems. Figure 1. Negative Externality of Production for Carbon Emission Figure 1 shows if the government is not intervening and the market is determined by only supply and demand, known as free market, the marginal private costs of the firm are below the marginal social cost because there is an extra cost to society caused by pollution. ...read more.

Middle

The tax requires the country's 500 biggest polluters to pay A$23 per tonne for their carbon emissions. Figure 2: Taxing a Negative Externality of Production for Carbon Emission Figure 2 shows when the government decided to tax that will help the economy, there is still a welfare lose, but it is less than under the free market with no government intervention. The pink color shading shows the welfare loss before the tax and the red color shading shows the welfare loss after taxing, which clearly shows it would reduce the deadweight burden, but not eliminate it completely. It is suggested that government should counter the externality to increase welfare. In this case, stakeholders include firms, labors, and households. Firms are the increase cost, labors refer to the consideration of losing job and households refer to the price level that is rising. ...read more.

Conclusion

It is suggested in the article, however, not their final decision. Firms are the increase cost, labors refer to the consideration of losing job and households might consider rearranging the price level and firms should consider about increasing cost, which not a lot of people could afford. The other choices take time to plan and have to consider a lot of consequences. However, taxing is not easy as well. It could be difficult to measure accurately the pollution created, but it does help reduce the welfare loss, which already is improving. Peter Hoeller and Markku Walli, Autumn 1991, Energy Prices, Taxes and Carbon Dioxide Emissions [online] OECD Economic Studies No. 17. Available at: <http://www.oecd.org/dataoecd/33/26/34258255.pdf> Tom Marshall, February 3 2009, CO2 Emissions harm Ocean's ability to absorb carbon [online] Natural Environment Research Council. Available at: <http://planetearth.nerc.ac.uk/news/story.aspx?id=311> Australia MPs Pass Carbon Tax The Guardian October 12, 2011 Word Count: 724 November 14, 2011 Microeconomics Practice Commentary By: Anica Wang ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Old IB Questions

    they can (through formal or informal collusion), and when they do not collude they still avoid competitive price-cutting as this is likely to result in lowering their profits. However, oligopolistic firms usually do engage in intense non-price competition. Non-price competition involves efforts by firms to increase their market share by

  2. What is the impact of the Notional Interest Tax Deduction system on investments in ...

    Finally, exports will increase for Belgian companies due to an increase in production of goods and services as well as greater demand from China and India with greater disposable incomes further leading to a rise in national income. It is imperative to understand that not only will the hypothetical tax

  1. Growth and Development Problem Set - IB Economics exam questions and answers.

    Clearly different types of governance can lead to significant diversity of economic growth. Which one is more suitable to domestic development and whether it is really satisfied by national people will eventually determine the economic growth rates. The technological progress is a primary factor in stimulating the economic growth.

  2. Economics Commentary - Russian Quota on US Pork and Indian Government Tax on cars.

    The initial quota allowed domestic producers to supply 0-QS1 and QS2-QD2 tonnes of pork at a price of WP+Quota. This quota meant that their revenue had increased but they will see their revenue increased further with the implementation of the lower quota.

  1. Vacation In Australia

    If people know about the marvelous biological environment that takes place in Australia, especially the koalas, kangaroos, coral reefs and all that stuff they will certainly prefer going to there and demand for tours in Australia will increase. The problem in this determinant is that Colombian travelers and tourists don't

  2. Economics Commentary - Tax cuts make a cross-party comeback, thanks to economic woe

    Their latest wheeze is to give firms hiring workers who have been unemployed for at least three months relief from their national insurance (NI) contributions, paid for by some of the cash saved on jobless benefits. This comes on top of existing pledges to lighten sales taxes and NI for

  1. Negative external impacts of women's oppression on the economic and environmental welfare of Pakistan

    Lack of women?s education throughout these cultures is detrimental to the future of their own economy and environment. With limited opportunities for women, it becomes difficult to enlighten your community about the environment when they won?t listen to you. Opportunities have recently arisen for women in Pakistan in terms of work.

  2. Commentary on the article. The introduction of the weed pass in Amsterdam will lead ...

    Police in Limburg announced earlier this week that 386 people had been arrested for buying or selling cannabis since the introduction of the weed pass in the province in May. This article discusses the possible outcomes surrounding the implementation of the ?weed pass? in The Netherlands.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work