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Suppose that the inverse demand function for wool is p = A/q for some constant A. Suppose that 1/4 of the world's wool is produced in Australia. (a) If Australian wool production increases by 1% and the rest of the world holds its output constant, what will be the effect on the world price of wool? (b) How does the marginal revenue to Australia from an extra unit of wool relate to the price of wool?
Assume that after the exchange of one permit, the marginal cost of abatement is for the firm that sold the permit for $170 also the marginal cost of the firm
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What technology available to produce your product suddenly improves. You should note whether the scenario indicates a shift of the curve or movement along the curve. You are a supplier of widgets.
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