Effect of effluent fees on the firm input choices, Microeconomics

Assignment Help:

The Effect of Effluent Fees on the Firms' Input Choices

*  Firms which have a by-product to production produce an effluent.

*  An effluent fee is a per unit fee which firms must pay for effluent that they emit.

*  How would producer respond to an effluent fee on the production?

The Scenario: Steel Producer

1) Located on the river: Low cost transportation and emission disposal.

2) EPA imposes a per unit effluent fee to reduce environmentally harmful effluent.

3) How should firm respond to this?

The Cost Minimizing Response to the Effluent Fee

151_effluent fee.png

2372_effluent fee1.png


*  Observations:

- The factors can be substituted more easily; the more effective the fee is in reducing effluent.

Greater the degree of substitutes, less the firm will have to pay (for example $50,000 with the combination B instead of $100,000 with the combination A). 


Related Discussions:- Effect of effluent fees on the firm input choices

Economic concepts, Term Paper: A final paper that focuses on the course con...

Term Paper: A final paper that focuses on the course content, applied in the setting of your current or past employer, will be due in Module. In this paper you will focus on the fo

Unemployment, causes and effect of the unemployment

causes and effect of the unemployment

Define contribution pensions, Q. Define Contribution Pensions? Defined ...

Q. Define Contribution Pensions? Defined Contribution Pensions: A pension plan which makes no specified promise about level of pension paid out after retirement. In its place,

Level of aggregate demand in economy, Q. Level of aggregate demand in econo...

Q. Level of aggregate demand in economy? Demand-pull inflation takes place when there is an increase in level of aggregate demand in economy. Aggregate demand comprises five co

Marginal rate of technical substitution and productivity, MRTS and Marginal...

MRTS and Marginal Productivity The change in output from change in labor equals:                     The change in output from change in capital equals

Short run production period and long run production period, Short run produ...

Short run production period and long run production period: The short run is a period of production during which some factors of production are fixed and some too are variable

Factors that calculate price elasticity of demand, Factors that calculate p...

Factors that calculate price elasticity of demand: The proportion of Income spent on the Commodity If the price of a good is relatively low such the expenditure on it is a

Meter replacement cost, The town utilizes standard disc type PD water meter...

The town utilizes standard disc type PD water meters for all residential connections. These meters were warranted by the manufacturer to be accurate within two percent of actual f

Majority minority, Are there any economic effects to non-Hispanic whites, g...

Are there any economic effects to non-Hispanic whites, given that they no longer represent the majority of the population? Why are these examples important from an economic standpo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd