Business, 15.04.2021 18:10 EmmaKozlewski4907
Maggie’s private marginal benefit for cigars is PMBM(x) = 100 − x, where x the number of cigars. Rui’s marginal external cost is MECR(x) = x/2. Cigars cost Maggie PMC =$20
(a) Calculate and graph Maggie’s net private marginal benefit and Rui’s marginal external cost functions. Find the socially optimal number of cigars, x∗, Maggie would be allowed to smoke. Find the Pigouvian tax, t∗, which would generate the social optimum and show this on your graph.
(b) How many cigars, xNL, would Maggie smoke if she were allowed to smoke as many as she pleased if she is not liable (NL) for costs to Rui? Find the dead-weight-loss, DW LNL at xNL. If, instead, Maggie were liable (L) for damages to Rui, how many cigars, xL, would Rui allow to be smoked and what is the dead-weight-loss of this, DW LL? Show these on your graph.
(c) Suppose that transactions costs, T C, are less than min[DW LL, DW LNL]. Which rule, liable or not liable, causes less social costs for society? Explain. Which rule would Rui and Maggie each prefer? Explain. Hint: Let PL and PNL be the payment made to get the one with property rights to trade.
(d) Suppose that transactions costs, T C, are greater than max[DW LL, DW LNL]. Which rule, liable or not liable, causes less social costs for society? Explain.
(e) Suppose that min[DW LL, DW LNL] < T C < max[DW LL, DW LNL]. Which rule, liable or not liable, causes less social costs for society? Explain.
Answers: 2
Business, 22.06.2019 12:00
Agovernment receives a gift of cash and investments with a fair value of $200,000. the donor specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. the $200,000 gift should be accounted for in which of the following funds? a) general fund b) private-purpose trust fund c) agency fund d) permanent fund
Answers: 1
Business, 22.06.2019 13:50
Diamond motor car company produces some of the most luxurious and expensive cars in the world. typically, only a single dealership is authorized to sell its cars in certain major cities. in less populous areas, diamond authorizes a single dealer for an entire state or region. the manufacturer of diamond automobiles is using a(n) distribution strategy for its product.
Answers: 2
Business, 22.06.2019 21:40
The farmer's market just paid an annual dividend of $5 on its stock. the growth rate in dividends is expected to be a constant 5 percent per year indefinitely. investors require a 13 percent return on the stock for the first 3 years, a 9 percent return for the next 3 years, a 7 percent return thereafter. what is the current price per share? select one: a. $212.40 b. $220.54 c. $223.09 d. $226.84 e. $227.50 previous pagenext page
Answers: 2
Maggie’s private marginal benefit for cigars is PMBM(x) = 100 − x, where x the number of cigars. Rui...
Mathematics, 28.07.2020 09:01
Mathematics, 28.07.2020 09:01
Mathematics, 28.07.2020 09:01
Mathematics, 28.07.2020 09:01
Mathematics, 28.07.2020 09:01
Mathematics, 28.07.2020 09:01
English, 28.07.2020 09:01
Social Studies, 28.07.2020 09:01
Mathematics, 28.07.2020 09:01
History, 28.07.2020 09:01
Mathematics, 28.07.2020 09:01
Geography, 28.07.2020 09:01