Draw a supply and demand curve for the output

Assignment Help Business Economics

Reference no: EM13733502

A paper mill has leaked a toxic substance (chlorine) into the ground. Fixing the leak was very expensive so the paper mill chose not to fix the leak. Once local residents and local government discovered that the toxic was contaminating local water supplies, though,the factory agreed to fix the leak.

a) Draw a supply and demand curve for the output (paper) produced by the paper mill before the local water contamination was discovered, i.e. residents do not know about the leaking. Use this graph as the initial market status.

b) How will the supply curve be affected by the decision to fix the leak? Add a new supply curve to your initial diagram to reflect this change. What will happen to the equilibrium price and quantity?

Note: since the leak is fixed, the water quality is good. the demand on the water is not affected. We focus on the supply side here.

c) How will the buyers of paper from the factory who live far away from the contamination be affected by the decision to fix the leak? are they happy?

Reference no: EM13733502

Questions Cloud

About the net present value : Chris is renting a house, and it does not have a refrigerator. A refrigerator is worth $3 every day because Chris will eat out less. Chris has a discount rate of 18%. Refrigerators usually last 5 years. How much is Chris willing to spend on a refrige..

Estimated that the cost function of a single-product firm : An economist estimated that the cost function of a single-product firm is: The fixed cost of producing 10 units of output. The total cost of producing 10 units of output. The average total cost of producing 10 units of output.

Long-term implications of any decision : Compose an e-mail to the owners explaining the situation and your recommendation for action. Communicate the importance of the decision from a policy-setting perspective and long-term implications of any decision.

Describe product development and the product life cycle : New Product Development and the Product Life Cycle and Core Market Offerings and Defining the Product

Draw a supply and demand curve for the output : A paper mill has leaked a toxic substance (chlorine) into the ground. Fixing the leak was very expensive so the paper mill chose not to fix the leak. Once local residents and local government discovered that the toxic was contaminating local water su..

Project report on grand wines : you are required to present an initial project report on Grand Wines to the project sponsor that includes the following specific project outputs to show how you propose to implement this project:

Terminate the program or move to the development phase : A pharmaceutical company has already spent 1 million dollars in research for a new drug and now has to make a decision. The company can either terminate the research program or it can move to the development phase. If the company moves to the develop..

Prices under third-degree price discrimination : You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -6, while group 2’s is -3. Your marginal cost of producing the product is $70. Determine your optim..

Prepare a positioning statement : Prepare a positioning statement. Include a perceptual map that shows your company's position against its competitors. From this map, create a statement that depicts your position

User Account

All Pages