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Suppose your neighbour likes to repair motorcycles in his front yard during evenings and on weekends, and he earns $400 per week from this work. However, the sight of piles of greasy motorcycle parts and the additional noise and traffic caused by his customers reduces your value of living in this neighbourhood by $300 per week. If your neighbour has a right to operate this business, what is the efficient outcome? If you have a right to live in peace and quiet, how can you achieve the efficient outcome? If you have a right to live in peace and quiet, but have to hire a lawyer to bargain for you, what is the maximum you should spend on the lawyer to achieve the efficient outcome?
if they use a regulation should they allow for pollution permits? explain the benefits and detriments of each form of control. what would you recommend?
Offshore Petroleum's fixed costs are $2,500,000 and its debt repayment requirements are $1,000,000. Selling price per barrel of its oil is $18 and variable costs per barrel are $10. Determine the breakeven output (in dollars). Determine the number of..
Consider a company that assembles electric toasters using labor and robots. Suppose that in 1950, robots were so crude that they were useless in the assembly of toasters, so that toasters had to be assembled entirely by hand. Now suppose that as a re..
What kinds of people are most likely to have their utility reduced by such a law. Why do you think that the government requires such insurance.
When negative externalities exist in a market,
Consider the horizontal quality model on the unit interval from 0 to 1. There are N consumers located uniformly along the interval. There are two firms, with zero marginal costs, initially located at 0 and 1. If the firms sell to the whole market, de..
Consider an infinitely repeated Cournot duopoly with discount factor ? 0, and inverse demand functions p(Q)=a-bQ, with a>c and b>0. Find the condition on the discount factor ?, for which the two firms could successfully collude over the monopoly outp..
If in an economy a $120 billion increase in consumption spending creates $120 billion of new income in the first round of the multiplier process.
Governments often impose taxes on the emission of specific pollutants, such as carbon tax. What is the relationship between the short-run effect and the long-run effect of such a tax on the quantity of pollution emitted? What is the relationship betw..
Wolfe and Baker are the only two firms producing door stopers because of such a small market in their area. Both firms have a marginal cost (MC) of $8 and no fixed cost (FC = $0). The demand for door stopers is given by function P = 32 - Q, where P i..
You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.25 18% Normal 0.5 9% Weak 0.25 -5% What is the stock's expected return?
Explain why income taxes were raised 200% (from 1.5, 4, and 25 percent to 5, 8, and 63 percent) by the Revenue Act of 1932, and describe the effects.
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