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Firms A and B each produce 100 units of pollution. Firm A has a marginal cost of pollution reduction of MCA= 10+2QA. Firm B has a marginal cost of pollution reduction of MCB=3QB. The marginal benefit of pollution reduction is $150 per unit.
a. What is the socially optimal level of pollution reduction for each firm?
b. How much total pollution is there in the social optimum?
c. Explain why it would be inefficient to divide this optimal level of pollution by two and give each firm an equal number of pollution permits if they are not allowed to trade them.
d. How can the social optimum be achieved if firms are given equal numbers of pollution permits but are allowed to trade them?
e. A social optimum can also be achieved using a tax on pollution. What level of tax should the government choose?
Suppose that the level of capital in the economy is 200 units, the depreciation rate is 10%, and the level of investment is equal to 10 units. In this case:
To make your work easier to grade, please make Julie the row player, Kristin the column player also Larissa the page player.
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Wheelan (in Naked Economics) states that "the problem with Asian sweatshops is that there are not enough of them." How is Wheelan's statement illustrative of the concept that every market transaction makes all parties better off?
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A manufactures of a well-known brand of toothpaste is considering changing the way he prices his tooth paste. Currently, he is selling it at $5.00 per bottle. He hired a college professor of economics to estimate the demand function for the product.
What are the different types of unemployment and how are they related to the condition of the economy during a given period? Is it possible for the number of employed workers to increase while the unemployment rate rises? Explain??
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Illustrate what will occur to the equilibrium price also quantity of guitar strings
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