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A chemical producer dumps toxic waste into a river. The waste reduces the population of fish, reducing profits for the local fishing industry by $100,000 per year. The firm could eliminate the waste at a cost of $60,000 per year. The local fishing industry consists of many small firms.
a) Using the Coase Theorem, explain how costless bargaining will lead to a socially efficient outcome, regardless of whether the property rights are owned by the chemical firm or the fishing industry.
b) Why might bargaining not be costless?
c) How would your answer to part (a) change if the waste reduces the profits for the fishing industry by $40,000? (Assume, as before, that the firm could eliminate the waste at a cost of $60,000 per year.)
Total Rev0 8 16 24 32 40 48 56 1.) Calculate marginal revenue & marginal cost for each quantity 2.) Can you tell whether this firm is in a competitive industry and if the industry is in a long-run equilibrium
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roger has the following utility function with respect to wealthu 20w - 0.4w2.roger starts with w 25.a plot the
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Miguel is a farmer who produces oats. The oat market is a pure competition market. Miguel is now making choices in the short run. The going rate for oats is currently $24 per unit. The total cost function is as the table above shows. What is the p..
An alternative way to do implicit differentiation is to introduce a mythical extra variable t.
Consider the Joint Density: 2(x+y) if 0 2. Calculate Fx (0.5) 3. Calculate Fy (0.5)
Suppose two firms 1 and 2 compete in quantities and face a demand curve p = 100 - q. Suppose firm 1 has a constant marginal cost of 10 while firm 2 has a constant marginal cost of 40. Suppose they produce quantities simultaneously. a. Find q..
Jeff holds $50,000 wealth which has a utility of 7.07 utils (assuming utility is the square root of wealth in thousand dollars). He considers investing this in a gamble which has a 0.6 probability of increasing his total wealth to $100,000 and 0.4..
a. Determine the profit maximizing level of output. b. Compute the profit maximizing price. c. Calculate the upper and lower limits within which marginal cost may vary without affecting the profit maximizing output
Suppose that Tommy Hilfiger's marginal cost of a jacket is $100 and at one of the firm's shops, total fixed cost is $ 2000 a day. The profit-maximizing number of jackets sold in this shop is 20 a day. Then the shops nearby start to advertise their..
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