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Suppose two countries with domestic cap and trade policies are considering linking their two systems. country A has a cap of 30 tons of emissions, a domestic marginal cost of abatement of $12 and uncontrolled emissions level of 70 tons, while country B has a cap of 50 tons, a domestic marginal cost of abatement of $0.5a, where a is tons of emissions abatement, and an uncontrolled emissions level of 90 tons.
a. Before linkage what would be the prices in the two separate markets and how much abatement would each country choose?
b. If these two markets were linked by allowing each country to buy from and sell allowances to the other, what would be the prices in the two markets? How much would each country abate? Describe the transfer of allowances, if any, that would take place between the two countries.
The New York Times (Nov. 30, 1993) reported that "the inability of OPEC to agree last week to cut production has sent the oil market into turmoil...[leading to] the lowest price for domestic crude oil since June 1990." Why were the members of OPEC tr..
Hamsung , Inc., a manufacturer of electronic appliances, estimated the unit cost of one of its products as follows: Material costs $ 63 Labor costs $ 24 Overhead $110 $197 The overhead cost is made up of $50 per unit variable costs and $60 per unit f..
How big would that budget have to be before he would spend a dollar buying a first cup of coffee.
Suppose a farmer (A) faces the payoff matrix below to describe the income she would derive from her choice of pesticide use relative to the choices of other farmers. The reason for this payoff matrix is the development of pesticide resistance due to ..
In Mexico in 1950, the richest 5% earned 40% of the income and the poorest 40% earned 14.3% of the income. In 1957, the richest 5% earned 37% of the income and the poorest 40% earned 11.3% of the income. In 1963, the richest 5% earned 28.8% of the in..
Why do cotton growers spend billions of dollars to dam rivers and transport water hundreds of miles to grow cotton in California deserts?
A bulldozer can be purchased for $380,000 and used for 6 years, when its salvage value is 15% of the first cost. Alternatively, it can be leased for $60,000 a year. Remember that lease payments occur at the start of the year. The firm's interest rate..
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The Cobb-Douglas production function is given by: Y = AK^(α)L^(1−α) where 0
Consider a small open economy operating a fixed exchange rate. Compare the effects on domestic real GDP of an increase in government spending under each of the following circumstances:
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A car manufacturing company adopts a new technology that, ceteris paribus, increases the productivity of capital. At the same time, workers unionize and demand higher wages. Assume that for this firm capital and labor are substitutable. Which of the ..
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