What is the potential cost to each firm

Assignment Help Microeconomics
Reference no: EM131165493

Two firms, A and B, each currently emit 100 tons of pollution into the air. To reduce the pollution from now on EPA will require a pollution permit for each ton of pollution emitted into the air. EPA limits pollution to 60 tons, giving each firm 30 pollution permits. It costs Firm A $100 for each ton of pollution that it eliminates before it is emitted into the air, and it costs Firm B $50 for each ton of pollution that it eliminates before it is emitted into the air. What is the total cost of current production if EPA orders the firms to reduce pollution to 60 tons? If the two firms can buy or sell pollution permits from each other, assume a price of $75 per permit is negotiated, what is the potential cost to each firm if the existing production is maintained?

Reference no: EM131165493

Questions Cloud

What is an information system and how does it work : What is an information system? How does it work? What are its management, organization, and technology components and why are complementary assets essential for ensuring that information systems provide genuine value for organizations?
The effect of using nicotine gum as an adjunct : How should he analyze his data? What problem arises from the fact that there was not a group given plain-old- candy-store gum? (Note: The experimental [gum] group had abstinence rates of 90% and 64% at one and six months, respectively, and the con..
What are the pros and cons : Share your reaction to the statement: "Having so much information available about people is helpful in all situations and from every perspective." What are the pros and cons? Provide a specific incident of personal or professional content in your..
Competence of and performance expectations : What similarities exist between perceptions about the competence of and performance expectations for workers with disabilities and older workers? How are the two groups' employment experiences similar? How are they different?
What is the potential cost to each firm : Two firms, A and B, each currently emit 100 tons of pollution into the air. If the two firms can buy or sell pollution permits from each other, assume a price of $75 per permit is negotiated, what is the potential cost to each firm if the existing..
Proposed equipment has ten-year life with no scrap value : CB Electronix must buy a piece of equipment to place electronic components on the printed circuit boards it assembles. The proposed equipment has a 10-year life with no scrap value. The supplier has given CB several purchase alternatives.
What different sampling techniques in quantitative research : What percentages represent the standard normal distribution for continuous random variables according to the empirical rule? What are the different sampling techniques in quantitative research? How can we gather samples and how does this affect our p..
How are the technologies related to upss business strategy : What technologies are used by UPS? How are these technologies related to UPS's business strategy? What strategic business objectives do UPS's information systems address?
Find the price and the quantity at the intersection : Find the price and the quantity at the intersection of two demand curves with a kink. Identify the portions of the two demand curves, with "L shape above the kink" and the portion of the other two demand curves with "reverse L shape below the kink

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd