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Assume two countries, West and East, want to decide whether to abate (control) their pollution or not. For simplicity assume each country have only two strategies, abate or do not abate. The cost of abatement for these countries is given by CE = 5 + aE + aE2 CW = 2+aW +0.5 aW2 Where aE and aW present the abatement effort by country East and West respectively. If they put some effort on abatement, the quality of environment will improve for both countries. Assume the environmental benefits of abatement for each country is BE = 15 (aE + aW) BW = 25 (aE + aW) If both countries do nothing (no abatement) the estimated environmental damage for East is $5 billion and for West is $2 billion. a. Construct the normal form (table) game. b. Under which condition (abate, abate) is the unique Nash equilibrium for this game? c. find the abatement levels or (aE and aW) for both countries which satisfy the conditions you find in part b. Notes:aE and aW could be either 0 or any other amount which you may call it simply aE and aW. So, e.g., if country E doesn't abate aE=0, if it does it's abatement level is aE (which could be any positive number and then in the third part you will find a range of values which satisfies condition b). As a result, for cases that a country is abating, the net payoff will be a function of aE and/or aW.
The demand-supply market models (for each market below) to graphically illustrate and explain the following scenarios (in the short run). Identify for each scenario what the effects on price and quantity are likely to be. State your assumptions.
Assume the annual cost of capital is 10% of the total investment( this represents annual fixed cost of the initial investment). At what production quantity per year would the brewery be indifferent between the two investment opportunities.
Explain how, with trade, Nebraska can end up with 40 million bushels of wheat and 120 million bushels of corn while Iowa can end up with 40 million bushels of corn and 120 million bushels of wheat.
A firm has a cost function given by the following: Find the firm's production function, y= f(x1, x2).
Most people are concerned that wages determined in the labor market are unfair and most people typically earn the bulk of their income from wages and salaries.
Michael makes a great point. Economists often note that there is no such thing as a free lunch
Firm operates in a perfectly competitive market in which the market price is $10 per unit. What is its profit-maximizing rate of production?
Currently the foreign earnings of U.S. multinational companies are taxed only when the income is returned to the United States. Taxes are deferred if the income is reinvested abroad. The department seeks a tax rate that will maximize total tax reve..
Use the classical (RBC) model
Derive the equation of the consumer's demand curve for x and with y on the vertical axis and x on the horizontal axis, draw a price-consumptioncurve when the price of x changes.
Two firms face the demand equation given by P=200,000 -6(Q1 + Q2) where Q1 and Q2 are the outputs of two firms. The total cost equations for two firms are given by: TC1 = 8000Q1 and TC2 = 8000Q2.
Analyze how the market will respond in each example (from the perspective of both the supplier and the consumer. Recommend examples in each of the three examples as to how consumer's demand may be satisfied.
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