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- A company is considering building a bridge across ariver. The bridge would cost $2 million to build andnothing to maintain. The following table shows thecompany’s anticipated demand over the lifetime ofthe bridge:Price per CrossingNumber of Crossings,in Thousands$8 07 1006 2005 3004 4003 5002 6001 7000 800a. If the company were to build the bridge, whatwould be its profit-maximizing price? Would thatlevel of output be efficient? Why or why not?b. If the company is interested in maximizing profit,should it build the bridge? What would be itsprofit or loss?c. If the government were to build the bridge, whatprice should it charge?d. Should the government build the bridge?Explain.Table 1Buyer Willingness To PayLori $50.00Audrey $30.00Zach $20.00Calvin $10.002. Refer to Table 1. If the price of the product is $15, then who would be willing to purchase theproduct?a. Lorib. Lori and Audreyc. Lori, Audrey, and Zachd. Lori, Audrey, Zach, and Calvin3. Refer to Table 1. If price of the product is $30, then the total consumer surplus isa. $-10.b. $-6.c. $20.d. $30.b) Discuss and explain the concept of positive return toscale showing it relationship with the quantity ofproduction.
- The federal government decides to require that automobile manufacturers install new anti-pollution equipmentthat costs $2,000 per car. Under what conditions can carmakers pass almost all of this cost along to car buyers? Underwhat conditions can carmakers pass very little of this cost along to car buyers?Please helo me with this question There are 50 residents that live in a small town in California. Each resident uses electricity and there is one power station that produces electricity for the residents from coal. Each residents' demand for electricity is Q = 10 - 2P and the supply function for the power plant is Q = 150P. For each unit of electricity that the power station produces, there is a corresponding release of pollution that leads to asthma and other health problems for the 50 residents. The marginal damage of each unit of electricity produced, per person, is $.05. a. What is the market equilibrium price and quantity per unit of electricity? b. What is the efficient Pigouvian tax per unit of pollution? c. The government of this small California town decides to impose the efficient Pigouvian per unit tax on the power station. What is the new social optimum price and quantity per unit of electricity? d. What is the government tax revenue? e. What is the gain in total…With liability laws , a polluter will not have any compensation cost if they do not cause any damage . Select one : O a . True O b . False
- use diagramsa. What is the effect on the equilibrium price and quantity traded in market of theintroduction of a new technology that reduces costs of production for all firms?b. What is the effect on the equilibrium price and quantity traded in a market of a changein tastes that reduces the demand for the product?c. What is the effect on the equilibrium price and quantity traded in a market of theimposition of a tax per unit sold on suppliers?d. What is the effect on the equilibrium price and quantity traded in a market of thepayment of a subsidy per unit sold paid to suppliers?Write down a model of positive production externality with two firms, in which theproduction activities of one firm directly affects the production/cost of the other firm.State and explain the key assumptions of the model. Using the model, answer thefollowing questions:(a) Explain why the presence of a positive production externality could prevent therealisation of an efficient outcome.(b) Name a possible cure for the positive production externality and explain how itcould solve the inefficiency problem.Suppose that a firm’s emissions and Marginal Abatement Cost (MAC) data are summarized in thetable below. e MAC 0 200 10 180 20 160 30 140 40 120 50 100 60 80 70 60 80 40 90 20 100 0 a. If the price of a pollution permit is $100, how many permits will the firm need? Explain.b. Suppose that the price of a pollution permit increases to $120, how many permits will thefirm need? Explain.c. With this new price of $120, will the firm’s emissions increase or decrease? By howmuch? Explain.d. Can the firm sell any permits? If so, what is the revenue generated from permit sales?Explain.
- Explain the causes of food shortages that lead tostarvation.The marginal benefit of being able to emit a ton of sulphur dioxide emissions for twofirms are given by:MB_X = 320 – ( Ex / 3 )MB_Y = 500 – ( Ey / 2 )Note that these marginal benefit figures can be interpreted as marginal cost of abatingemission down to levels Ex and Ey.Government regulators want to reduce total sulfur dioxide emissions to a total of 1200tons.a) If the government imposes the same standard of 600 tons maximum emissions onboth firms what would be the total cost of abatement (calculated as the aggregatedmarginal benefits forgone)?b) If the government distributed 600 tradable pollution permits to each firm whatwould be the final allocation of these permits after the firms trade them? Whatwould be the total cost of abatement in this latter case?During the night, the electricity sector has a marginal cost of $1/MWh (megawatt-hour) forthe first 100 MWh produced (from wind turbines), and $20/MWh for each additional unit (from gasgenerators). During the day, they have a marginal cost of $1/MWh (megawatt-hour) for the first 50MWh produced (from solar panels), and $20/MWh for each additional unit (from gas generators).Nighttime and daytime demand are given by QnightD = 50 −P and QdayD = 200 −P , respectively.What are the market quantity and price during the day, and the market quantity and price at night?This is a model of the wholesale market for electricity, which you can think of as being competitive,but there is no resale between night and day.