Reference no: EM132998007
Question - Firms A and B each emit 15 units of pollution, and are the only firms in an industry. A regulator wants to reduce total pollution emissions in the industry by half. The marginal costs associated with pollution reduction are MCA = 3 + 4QA for Firm A and MCB = 3 + 2QB for Firm B, where QA and QB are the units of pollution emissions reduced by each firm.
1. What quantity of pollution reduction for each firm would represent an efficient (i.e. cost-minimizing) allocation?
a) Firm A
b) Firm B
2. Suppose the regulator imposes an emissions charge (a tax per-unit of emissions) on the two firms. What emissions charge would lead to the efficient (cost-minimizing) allocation?
a) Cost-minimizing Emissions charge
3. Suppose the regulator introduces an emissions trading policy, issuing one firm 8 allowances and the other firm 7 allowances to pollute. However, the firms would be permitted to trade allowances. Which firm would sell allowances, and which firm would buy allowances? What would be the ultimate market price of an allowance (i.e. where neither firm would gain from trading)?
a) Buyer of allowance
b) Seller of allowance
c) Ultimate market price of an allowance
4. Under the policy of emissions trading (Q. 3) does it matter which firm gets 8 allowances and which firm gets 7? Explain.
|
How does the intent of management impact
: What are bonds, and how does issuing bonds above or below their par value affect the amount of interest expense recorded each accounting period?
|
|
What the amount the company would have to borrow
: If the company has a policy of maintaining an end of the month cash balance of $98000, what the amount the company would have to borrow
|
|
Journalize the transactions for wild trout gallery
: Journalize the transactions. If an amount box does not require an entry, leave it blank. Note: For the December 31 adjusting entry, assume the $982,100
|
|
What is an example of a probable future sacrifice
: Why would a company consider a liability to be a sacrifice for the future growth? Liabilities are probable future sacrifices of economic benefits arising.
|
|
What quantity of pollution reduction for each firm
: What quantity of pollution reduction for each firm would represent an efficient (i.e. cost-minimizing) allocation
|
|
How many weeks will original last
: How many weeks will your original $1,100,000 last? Today, you retire with $1,100,000 and you want to ensure that you can withdraw $1250 per week
|
|
Calculate total dividends
: Calculate total dividends for 2001 under following alternatives: 2001 dividend payment will remain at the long-run growth rate in earnings
|
|
How much will you have twenty years from today
: Assume you currently have $220,000. Assuming you earn 9.1% as an annual rate of return, how much will you have 20 years from today when you retire?
|
|
What rate of interest are paying
: What rate of interest are you paying? You want to borrow $30,000. For the loan to you must repay $1100 every quarter (4 times per year) for the next 8 years
|