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Question: 1. Cap-and-trade (a) Suppose that the campuses of UCLA and USC each use energy q to produce ideas worth πi(q) = pq - ci 2 q 2 , where i = 1 indexes UCLA and i = 2 indexes USC. If p = 1, c1 = 1, and c2 = 4, what will q1 and q2 be if UCLA and USC each maximize the value of their ideas? (b) Environmentalists have learned that the total energy used by both campuses, q1 + q2, creates a negative externality, D(q1 + q2) = 1 2 · (q1 + q2). What are the first-best levels, q FB 1 and q FB 2 ? (c) With your answer from (b), calculate the total first-best quantity, QFB = q FB 1 + q FB 2 . Suppose that we require UCLA and USC each to produce exactly QFB/2. Will this attain the first-best outcome? Explain. (d) Suppose we issue QFB/2 permits to UCLA and QFB/2 permits to USC, and allow them to trade. Each school cannot use more energy than they have permits. Calculate how many permits USC will sell to UCLA. Does this yield the first-best outcome?
How was America affected by the Great Depression? Include information on America's change in GDP, unemployment rates, national debt, and effects
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The seller considers selling these objects through second-price auctions. In particular, he considers two kinds of sales. First, he may auction off these objects with three different second-price auctions, one for each object. Call this the "single-o..
Refer to Figure above. The effect of a decrease in the price of food, as depicted in the figure, leads us to believe that.
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