Effect of effluent fees on the firm input choices, Microeconomics

The Effect of Effluent Fees on the Firms' Input Choices

*  Firms which have a by-product to production produce an effluent.

*  An effluent fee is a per unit fee which firms must pay for effluent that they emit.

*  How would producer respond to an effluent fee on the production?

The Scenario: Steel Producer

1) Located on the river: Low cost transportation and emission disposal.

2) EPA imposes a per unit effluent fee to reduce environmentally harmful effluent.

3) How should firm respond to this?

The Cost Minimizing Response to the Effluent Fee

151_effluent fee.png

2372_effluent fee1.png


*  Observations:

- The factors can be substituted more easily; the more effective the fee is in reducing effluent.

Greater the degree of substitutes, less the firm will have to pay (for example $50,000 with the combination B instead of $100,000 with the combination A). 

Posted Date: 10/12/2012 3:04:22 AM | Location : United States







Related Discussions:- Effect of effluent fees on the firm input choices, Assignment Help, Ask Question on Effect of effluent fees on the firm input choices, Get Answer, Expert's Help, Effect of effluent fees on the firm input choices Discussions

Write discussion on Effect of effluent fees on the firm input choices
Your posts are moderated
Related Questions
Question:  Explain the contribution of capital accumulation in the progress of an economy? Capital makes the technological progress of the economy possible. Different technol

what is the value in 10 years of 1 million dollars if interes rates are 4%?


please may you explain this concept

The Bandwagon Effect - This is desire to be in style, to have a commodity because almost everyone else has it, or to indulge in it. - This is major objective of marketing an

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

How might an accurate value for the multiplier aid a government in setting fiscal policy? Any given multiplier will enhance national income at a given rate times enhance in gov

Double Jeopardy A condition where an entrepreneur's main source of income and net worth depend on the entrepreneur's organization.

MRP systems - basic inputs  It has been estimated that in the USA where MRP was originated and developed by Oliver Wight and George Plossl (1985), virtually all Fortune 500 ma