Firms A and B each produce 80 units of pollution. The federal government wants to reduce pollution levels. The marginal costs associated with pollution reduction are MCA= 50 + 3QA for firm A and MCB=20 + 6Qa for firm B, where QA and Qs are the quantities of pollution reduced by each firm. Society's marginal benefit fiom peltion rctns gom by MB-620-3, whare Or is the total reduction in pollution (Qt= QA+ QB ).
a. What is the socially optimal level of each firm's pollution reduction?
b. How much total pollution is there in the social optimum?
c. Explain why it is inefficient to give each firm an equal number of pollution permits (if they are not allowed to trade them).
d. Explain how the social optimum can be achieved if firms are given equal numbers of pollution permits but are allowed to trade them
e. Can the social optimum be achieved using a tax on pollution?
Answers: 3
Business, 22.06.2019 04:40
Dahlia enterprises needs someone to supply it with 127,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. it will cost you $940,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. you estimate that in five years, this equipment can be salvaged for $77,000. your fixed production costs will be $332,000 per year, and your variable production costs should be $11.00 per carton. you also need an initial investment in net working capital of $82,000. if your tax rate is 30 percent and your required return is 11 percent on your investment, what bid price should you submit? (do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
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Business, 22.06.2019 20:00
A$100 million interest rate swap has a remaining life of 10 months. under the terms of the swap, the six-month libor is exchanged semi-annually for 12% per annum. the six-month libor rate in swaps of all maturities is currently 10% per annum with continuous compounding. the six-month libor rate was 9.6% per annum two months ago. what is the current value of the swap to the party paying floating? what is its value to the party paying fixed?
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Business, 22.06.2019 20:10
Given the following information, calculate the savings ratio: liabilities = $25,000 liquid assets = $5,000 monthly credit payments = $800 monthly savings = $760 net worth = $75,000 current liabilities = $2,000 take-home pay = $2,300 gross income = $3,500 monthly expenses = $2,050 multiple choice 2.40% 3.06% 34.78% 33.79% 21.71%
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Business, 23.06.2019 00:00
The undress company produces a dress that women use to quickly and easily change in public. the company is just over a year old and has been successful through a kickstarter campaign. the undress company has identified a customer segment, but if it wants to reach a larger customer segment market outside of the kickstarter family, what question must it answer?
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Firms A and B each produce 80 units of pollution. The federal government wants to reduce pollution l...
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