Reference no: EM131212484
Open Access and Paper Production
Surrounding the Great Lake are four paper mills, each producing 100 tons of paper per year. The paper is sold on the national market for $2 per ton, and including all the costs of production, costs for each firm are $1 per ton. Thus each firm earns a pure economic profit of $1 per ton. These paper mills require freshwater to operate and also produce a pollutant called gunk, which the mills dump into the Great Lake. New paper mills can also locate on the Great Lake and produce at a base cost of $1 per ton. However, for each new paper mill that arrives, the water will become more polluted with gunk, and each firm will have to install a water treatment facility to obtain freshwater. This externality associated with new plants will raise the costs of paper production at all facilities, including the new one, by $0.15 per ton for each new mill.
a. Assume there is open access to the Great Lake. If paper mills will continue to locate as long as there is any economic profit to be earned, how many new mills will be built? How many mills maximize total combined profits for the paper producers? (Hint: Average revenue remains constant at $2. Create a table that compares average revenues with average and marginal costs as new firms locate around the lake.)
b. Draw a diagram of the marginal cost and marginal revenue curves with the number of mills on the horizontal axis. Assume that government regulation restricts lake access to the profit-maximizing number of firms. Show the resource rent earned by the mills that are allowed to operate.
c. Suppose that government regulation reduced the number of mills by one from the number that would have resulted given open access. Show that the increase in profits to the remaining firms (the resource rent) is sufficient to compensate the firm denied access for its lost profits.
International business and the world economy
: It has been suggested that the existence of the World Wide Web has impacted international business and the world economy. Explain your answer with a well-constructed and cogent response.
|
Proportion to the level of production
: Explain the concept under the variable cost which stipulates that the variable costs change in direct proportion to the level of production.
|
Relevant compliance issues
: 1) Do outside research on what are the relevant compliance issues associated with the Disability Laws, especially the regulations, for employers in general. This is from the perspective as it relates to Title IIV in relation to employee/employeer ..
|
Calculate us net national gains or losses from the tariff
: Calculate the U.S. net national gains or losses from the tariff, and the U.S. gains or losses from the VER, relative to free trade.
|
Draw a diagram of the marginal cost and marginal revenue
: Draw a diagram of the marginal cost and marginal revenue curves with the number of mills on the horizontal axis. Assume that government regulation restricts lake access to the profit-maximizing number of firms. Show the resource rent earned by the ..
|
History of healthcare compliance
: How has the history of healthcare compliance changed since its inception? Hint: Look at the ways in which penalties have increased in various ways. Describe your responsibilities as a healthcare manager as it applies to fraud and abuse.
|
How does this firm make money
: Prepare a two page (double-spaced) essay presenting the investment consulting firm and answer the following question: Dimensional Fund Advisors "How does this firm make money by taking advantage of the Efficient Market Hypothesis?"
|
Meyers-briggs type indicator personality inventory
: What is the Meyers-Briggs Type Indicator personality inventory, and why is it a useful tool for healthcare executives? Describe why human resources management is comprised of strategic and administrative actions. If you are responsible for resea..
|
Sum up the responsibility of hr management
: The textbook identified several issues that arise in the field of human resource (HR) management. Sum up the responsibility of HR management to address and solve these problems.
|