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The EPA now requires each firm has to surrender to the EPA four pollution certificates for every unit of output that it produces. The equilibrium market price of these permits is $2 per certificate. (Other industries use the same type of permits, so if a firm in the copper wire industry wants to purchase additional permits it is not limited to trading with firms in the same industry.) The firm is given 20 permits by the EPA and it can buy additional permits on the market or sell some of its endowment of twenty.
1. What is the firm's cost function when the cost of pollution certificates is included?
2. What is the firm's marginal cost function when the cost of pollution certificates is included?
3. Derive the firm's supply function.
4. The market demand function is still Q = 160 ! 5P, and there are still ten firms in the industry, each identical to Percam. Derive the market supply function and confirm that P* = 20 is the new equilibrium price.
5. What is the individual firm's profit maximizing level of output at the new equilibrium, and what is the resulting profit?
Suppose that a chair manufacturer is producing in the short run (with its existing plant and equipment). The manufacturer has observed the following levels of production corresponding to different numbers of workers:
Efficiency and sustainability are management goals with respect to renewable resources. As Field explains, biological and economic considerations are typically blended in determining the efficient allocation of these resources.
What are the FC, ATC, AFC, AVC and MC at these output levels?
All economics textbooks give examples that show diminishing marginal utility as consumption rises-However, it could be argued that a rational buyer should never experience negative marginal utility. Why?
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In each of the cases listed below determine what this consumer needs to do (in terms of purchasing X and Y) to maximizes their utility.
Assume that the nominal wage rate equals 60. In the short-run, aggregate demand and aggregate supply are equal at a price level of 1.0.
Explain what happens to the position of the nation's short-run Phillips Curve if the following events occur:
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Consider a market-clearing economy in which output (Y 1 )depends only on the capital stock (k 1 ) and an exogenous productivity variable ( θ1 ) according to the production function y1 = θ 2 f(k 2 ).
The following table shows the hours per week supplied to a particular market by three individuals at various wage rates. Calculate the total hours Per week (Q T ) supplied to the market.
Find the optimal (profit maximizing or cost minimizing) output of each firm. Find the price that each firm charges at the when producing the optimal output.
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