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Nuclear Classmates
Carlos and Mitchell are operating a nuclear power plant in their spare time. They are repairing a broken reactor with some duct tape and Elmer's Glue when a small amount of radiation escapes. It is not deadly, but causes about $100 in damages to everyone in the city with a population of 1 million.
a. Assume the chances of winning at trial are 100%, but the cost of a lawyer is $5,000. Analyze the situation in terms of efficiency, incentives, and outcomes.
b. Can you suggest a solution to this problem? How would it change your answers to part "a"?
c. Assume the chance of winning at trial is 5%. Is there any way that plaintiffs will sue in this situation? What legal remedy could help, and how? Explain.
Elucidate Congress is considering reinstating a 10% investment tax credit in order to stimulate the economy.
Assume consumption is represented by the following: C = 400 + .5Y. Also assume that planned investment (I) equals 100. Given the information, calculate the equilibrium level of income. Given the information, calculate the level of consumption and sav..
Suppose you purchase a 3-year, 5 percent coupon bond with face value $100 at par and hold it for two years. During that time,the interest rate falls to 4 percent. What is the price of the bond when you bought it? What is the price of the bond two yea..
q. assume that a household in a two-period model has income of 30000 in period 1 and 25000 in period 2 and the interest
The government releases a report saying that drinking coffee makes you live a longer, healthier life. At the same time, we discover that a very bad winter has killed most of the coffee plants in Brazil. How will these two changes affect the equilibri..
Moral hazard arises when people behave recklessly because ____. they know they will be saved if things go wrong they face financial difficulties arising out of external factors of the restrictions that IMF has imposed on them of the restrictions that..
Between the years of 1973 and 2003, Canadian real GDP trended downwards. Deflationary (contractionary) monetary policy contributed, at least in part, to the recession of the early 1990s. There is not much of a relationship between the growth rate of ..
Alvin’s demand for a product is QdA=10-P and Betty’s demand is QdB=5-P. Calculate Alvin and Betty’s marginal and total willingness to pay for 4 units of consumption of this product. Explain it graphically. Derive the aggregate demand function. What i..
Match each principle to the scenario. Each principle is only used once. The Cost of Something Is What You Give Up to Get It. Rational People Think at the Margin. People Respond to Incentives. Trade Can Make Everyone Better Off.
What would we get if we encoded COMPUTER using the given algorithm?
And asset will cost $1,989 when purchased this year. It is further expected to have a salvage value of $243 at the end of its 9-year depreciable life. Calculate the book value at the end of year 2 using method #2. Provide the answer with two decimal ..
q.your oil company must decide whether to drill a well at a cost of 500000 on a piece of leased property or to sell the
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