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Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 14SQP

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canada has not allowed for the bulk exportation of water. the current price for water for canadian consumers is $40 per tonne (typically delivered via an underground pipe to your house/business!) and canadians consume 3 m tonnes/yr. unfortunately, climate change has resulted in droughts in california and other southern states. to help meet this need and make a profit of course, canada has decided to allow international trade in water. the north america (or world) price for water is currently $60/tonne. (hint the supply lines does not move….)

Explain in words:-1) what will happen to production (supply) and canadian demand for water. 2) The effect on the producer and consumer surplus. 3) any imports / exports

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