8. Problems and Applications Q8 Suppose that the government decides to issue tradable permits for a certain form of pollution. True or False: In terms of economic efficiency in the market for pollution, it does not matter whether the government distributes the permits or auctions them off. True False True or False: If the government chooses to distribute the permits, the allocation of permits among firms does not matter for efficiency, but it would affect the distribution of wealth. True False

Which of the following has the largest impact on opportunity cost

Plastic and steel are substitutes in the production of body panels for certain automobiles. if the price of plastic increases, with other things remaining the same, we would expect: a) the demand curve for plastic to shift to the left. b) the price of steel to fall. c) the demand curve for steel to shift to the left d) nothing to happen to steel because it is only a substitute for plastic. e) the demand curve for steel to shift to the right

Miami incorporated estimates that its retained earnings break point (bpre) is $21 million, and its wacc is 13.40 percent if common equity comes from retained earnings. however, if the company issues new stock to raise new common equity, it estimates that its wacc will rise to 13.88 percent. the company is considering the following investment projects: project size irr a $4 million 14.00% b 5 million 15.10 c 4 million 16.20 d 6 million 14.20 e 1 million 13.42 f 6 million 13.75 what is the firm's optimal capital budget?