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Suppose the City of Klamath is considering plans to build a dam on the Klamath River. There are currently social benefits to the recreational fishermen who use the river to catch salmon. The dam would be source of revenue, as it would create hydroelectric power that the government could sell; however, it would prevent salmon from swimming upstream, essentially ending any recreational fishing in the area. The president of the Klamath Board of Economic Development hires you to calculate the net benefits associated with the River’s use as a recreational fishery versus the revenue the city could earn from the dam. He gives you the following information on the marginal costs and marginal benefits associated with different numbers of fishermen on the river in a year. Marginal Benefits of fishing the River Marginal Costs of fishing the River MB Q (fishermen) MC Q (fishermen) 0 3000 90 3000 15 2500 75 2500 30 2000 60 2000 45 1500 45 1500 60 1000 30 1000 75 500 15 500 90 0 0 0 1. Calculate the fee the government should charge the fisherman for access to the river in order to maximize net benefits in a given year. 2. Using the price you calculated in Question 1, calculate the net benefits to society derived from the river in a given year. 3. Assume that the net benefits you just calculated in Question 2 will continue from year 0 through year 10. Also assume that the dam would cost $250,000 in year 0 and then have annual maintenance costs of $30,000 in year 1 through year 10, while it would create $140,000 in benefits starting in year 1 and continuing through year 10. Calculate the Present Value of Net Benefits for leaving the river untouched and for constructing the dam over the period from year 0 to year 10 with a 4% discount rate and an 8% discount rate. 4. Explain why the project with higher discounted net benefits changes when we use a different discount rate?
Some fields have large enough quantities of both oil and natural gas that coordination must be achieved for the production of both, rather than oil alone as in our examples. Will fields with both oile and gas have greater difficulties in unitizati..
Define a Business Cycle and describe what happens to Economic growth and Consumption at each stage of the cycle.
Explain why would Pepsi agree to pay such a fee. What would likely happen if there were no pouring rights on campus.
Explain why both marginal and average costs are believed to eventually increase in the short run.
In an effort to estimate the mean amount spent per customer for dinner at an Atlanta restaurant, data were collected for a sample of 42 customers. The data collected resulted in a sample mean of $29. Based upon past studies the population standard..
In order to pay for those expenditures, Congress also approved a $100 billion increase in individual income taxes. Will these actions by Congress expand or contract the economy or are they just useless actions?
Discuss the four major economic flows that link the United States with other nations and provide a specific example to illustrate each flow.
After choosing the topic do the article review which includes following steps a. a short summary that clearly covers all of the fey elements in the article. this summary must show that you carefully read and understood the content of the article.
You have been hired by the Department of An Taoiseach to comment and critique a sustainable growth plan being considered by parliament.
See the inflation adjusted data also identify the periods of negative real economic growth. What might have caused each of these periods of economic decline.
If consumer incomes rise to $30,000, illustrate what will be the new equilibrium price and the new equilibrium quantity.
A rise in average variable price always increases the degree of operating leverage for firms making a positive net profit.
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