Reference no: EM131246443
You have been hired by the town of Bedford, Ohio, to conduct an analysis of ongoing operations by a local Coca Cola bottler. A study by the Ohio Environmental Protection Agency found that this firms’ water pollution is negatively affecting the environment. The study has been read by several politicians and they have requested the state government to impose a tax. Politicians expect to observe a decrease in the environmental damage (specifically, eliminate the deadweight loss).
Your task is to find the optimal tax that the government should impose to this Coca Cola bottler. To help you in your task, you are given the following information:
Inverse Demand: P=10- Q
Inverse Supply (Marginal Private Cost): MCp = 5+Q
Externality Cost (Marginal Cost of Externality): MCE = 0.5Q
a. Find the equilibrium market price and quantity (Pm,Qm)
b. Find the socially optimal equilibrium price and quantity ( P*,Q *)
c. Determine the optimal tax (the Green Tax) the state government should charge the local Coca Cola bottler to deal with the negative externality. Hint: To find this, measure the difference between the socially optimal equilibrium price (P*) and the price the firm receives at the socially optimal equilibrium quantity (Q*), that is, MCp (Q=Q*)
Changes in consumption at each level of income
: Suppose the wealth effect is such that $10 changes in wealth produce $1 changes in consumption at each level of income. Assume real estate prices tumble such that wealth declines by $80.
|
Law of diminishing returns take effect
: A) When does the law of diminishing returns take effect? B) Calculate the range of values for labor over which stages I, II and III occur.
|
Estimate the cost of employee absenteeism
: Finally, the company estimates that it loses $729,500 in additional overtime premiums, in extra help that must be hired, and in lost productivity from the more highly skilled absentees. As HR director for Consolidated Industries, your job is to es..
|
Government spending of an equal amount
: Why does a reduction in taxes have a smaller multiplier effect than an increase in government spending of an equal amount?
|
Water pollution is negatively affecting the environment
: You have been hired by the town of Bedford, Ohio, to conduct an analysis of ongoing operations by a local Coca Cola bottler. A study by the Ohio Environmental Protection Agency found that this firms’ water pollution is negatively affecting the enviro..
|
Analyze the selected e-business website
: Describe the structure, history, and growth of the selected e-business (i.e. how it started versus where it is now). Analyze the selected e-business website, and describe the overall structure and major components and features of the website
|
Production possibilities frontier
: The production possibilities frontier MUST be downward sloping regardless of whether it is concave, convex or a straight line, reflecting the principle that people face trade offs (and so do societies).
|
Relationship between the ethical leader and the follower
: What do you believe are the most important characteristics of ethical leadership? - Describe the relationship between the ethical leader and the follower.
|
Depreciation in the value of the dollar
: A depreciation in the value of the dollar (holding everything else constant) would cause an increase in US net exports.
|