Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 12, Problem 11SCQ
The state of Colorado requires oil and gas companies who use fracking techniques to retune the land to its original condition after the oil and gas extractions. Table 12.9 shows the total cost and total benefits (in dollars) of this policy.
- Calculate the marginal cost and the marginal benefit at each quantity (acre) of land restored. See Production. Costs and Industry Structure if you need a refresher on how to calculate marginal costs and benefits.
- If we apply marginal analysis, what is the optimal amount of land to be restored?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
The following accompanying table shows the relationship between the speed of a computer's CPU and its benefits and costs. Assume that all other
features of the computer are the same (that is, CPU speed is the only source of variation), and only the CPU speeds listed below are available for
purchase.
CPU
Total
Marginal Total |Marginal
GHz
Benefit
Benefit
Cost
Costs
2.0
$1,000
$900
2.5
$1,400
$100
3.0
$300
$1,200
3.5
$1,900
$1,500
4.0
$2,000
$400
Application of the Cost-Benefit Principle would lead one to purchase a
computer.
Which agricultural enterprise is relatively more efficient? Interpret all three derived economic parameters (breakeven yield, cost to produce a kilogram, and net profit) and discuss.
In western Kansas, corn can be grown in two
ways with or without irrigation. Dryland
farmers, who do not irrigate their corn, have
long-run average costs of
LAČC=Q^2-20Q+105 and long-run marginal
costs of LMCd=3Q^2-40Q+105, where Q is
measured in thousands of bushels. Farmers
lucky enough to water rights or river access
have lower costs: Their long-run average cost
is LACT=Q^2-16Q+67 and their long-run
marginal costs are LMCT=3Q^2-32Q+67.
A) If the corn market is in long-run
equilibrium,with both dryland and irrigated
corn being grown, what must the price of
corn be?
B) How much economic rent will farmers with
access to irrigation earn?
C) Explain why irrigating farmers earn
economic rents, but will still earn zero
economic profits.
Chapter 12 Solutions
Principles of Economics 2e
Ch. 12 - Identify the following situations as an example of...Ch. 12 - Identify whether the market supply curve will...Ch. 12 - For each of your answers to Exercise 12.2, will...Ch. 12 - Table 12.5 provides the supply and demand...Ch. 12 - Consider two approaches to reducing emissions of...Ch. 12 - Classify the following pollution-control policies...Ch. 12 - An emissions tax on a quantity of emissions from a...Ch. 12 - Four films called Elm, Maple, Oak, and (Shelly,...Ch. 12 - The rows in Table 12.7 show three market-oriented...Ch. 12 - Suppose a city releases 16 million gallons of raw...
Ch. 12 - The state of Colorado requires oil and gas...Ch. 12 - Consider the case of global environmental problems...Ch. 12 - A country called Sherwood is very heavily covered...Ch. 12 - What is an externality?Ch. 12 - Give an example of a positive externality and an...Ch. 12 - What is the difference between private costs and...Ch. 12 - In a market without environmental regulations,...Ch. 12 - What is command-and-control environmental...Ch. 12 - What are the three problems that economists have...Ch. 12 - What is a pollution charge and what incentive does...Ch. 12 - What is a marketable permit and what incentive...Ch. 12 - What are better-defined property rights and what...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - What are the economic tradeoffs between low-income...Ch. 12 - What arguments d0 low-income countries make in...Ch. 12 - In the tradeoff between economic output and...Ch. 12 - What does a point inside the production...Ch. 12 - Suppose you want to put a dollar value on the...Ch. 12 - Would environmentalists favor command-and-control...Ch. 12 - Consider two ways of protecting elephants from...Ch. 12 - Will a system of marketable permits work with...Ch. 12 - Is zero pollution possible under a marketable...Ch. 12 - Is zero pollution an optimal goal? Way or why not?Ch. 12 - From an economic perspective, is it sound policy...Ch. 12 - Recycling is a relatively inexpensive solution to...Ch. 12 - Can extreme levels of pollution hurt the economic...Ch. 12 - How can high-income countries benefit from...Ch. 12 - Technological innovations shift the production...Ch. 12 - Show the market for cigarettes in equilibrium,...Ch. 12 - Refer to Table 12.2. The externality created by...Ch. 12 - Table 12.12, shows the supply and demand...Ch. 12 - A city currently emits 15 million gallons (MG) of...Ch. 12 - In the Land of Purity, there is only one form of...
Additional Business Textbook Solutions
Find more solutions based on key concepts
E6-14 Using accounting vocabulary
Learning Objective 1, 2
Match the accounting terms with the corresponding d...
Horngren's Accounting (11th Edition)
E5-20 Journalizing purchase transactions
Learning Objective 2 July 24 Kerch. Inv. $64 CR
(
Howie Jewelers had ...
Horngren's Accounting (12th Edition)
Ravenna Candles recently purchased candleholders for resale in its shops. Which of the following costs would be...
Financial Accounting (12th Edition) (What's New in Accounting)
What is the relationship between management by exception and variance analysis?
Cost Accounting (15th Edition)
Best Wholesale recently calculated their break-even point for their Midwest operations. The national sales mana...
Principles of Accounting Volume 2
Discussion Questions 1. What characteristics of the product or manufacturing process would lead a company to us...
Managerial Accounting (4th Edition)
Knowledge Booster
Similar questions
- 6 A coal-fired power plant produces powerp with costs c(p) = . Each unit of power earns the plant $11. Burning coal releases particulate matter (PM2.5), a pollutant that is known to cause heart disease, lung disease, and birth defects. The coal plant borders a wildlife sanctuary which sells tourism visits t for a price $30. However, the sanctuary's animals are getting sick due to the negative externality of PM2.5, such that the costs to the sanctuary are c(t) = +². The local government decides to tax the coal plant to internalize its negative externality. What tax will restore the social optimum? (Round answers to 2 decimal places) Answer: Checkarrow_forwardThe table below shows average cost data for three different-sized plants—1, 2, and 3—which are the only three sizes possible. Output 100 Plant 1 $18 15 Plant 2 $14 11 200 300 11 7 400 10 500 14 8 9 Plant 3 $10 11 9 10 11 a. In what plant size is MES achieved? (Click to select) b. What is the economic capacity for plant 2? Economic capacity: c. What is the right-size plant to produce an output of 300? ✓ (Click to select) Plant 1 Plant 3 Plant 2arrow_forwardCreative Homework/Short Project As an account executive with a market research firm, you are responsible for deciding on the type of research to be used in various studies conducted for your clients. for each of the following client questions, list your choices of research approaches. a. Will TV or mobile device advertising be more effective for a local bank to use in its marketing communication plan? b. Should a California winemaker operating on a national scale switch from bottling its mid-tier wine ($9 to $15 per bottle) with corks to bottling it with screwcaps? c. Are consumers more likely to buy brands from firms that support strong sustainability initiatives? d. What existing features of an e-commerce site selling clothing to women are most important for making a purchase decision?arrow_forward
- A farmer is located next to the rancher. They face the following problem.Cattle graze on the farmer's fields and cause $30 worth of damage to corn each year. The rancher's business is worth $100 annually (not taking into account any crop damage). The farmer's business is worth $80 before the cattle trample the corn It would cost $10 to build a fence that would keep the cattle off the farmer's property. If the farmer is given property rights If the rancher is given property rights O A. the rancher will pay the farmer $30 in damages; the farmer will accept the $30 in crop damages B. the rancher will pay the farmer $30 in damages; the farmer will build the fence O C. the rancher will build the fence; the farmer will build the fence O D. the rancher will build the fence; the farmer will accept the $30 in crop damagesarrow_forwarda- The Western U.S. saw record heat waves in August, 2021. Electricity is heavily used in air conditioning leading to very high demand for electricity then. Would you expect the marginal costs of generating electricity to be similar to in May, 2021, lower orhigher? Why? b- Suppose California could add 1000 MWh of wind generation—which produces for four hours during the nighttime when temperatures are relatively low—or 1000 MWh of solar generation—which produces for four hours in the daytime when temperatures are relatively high. Which one would you have expected to lower total costs of electricity generation more in the summer? Why? Please explain by sketching the daytime and nighttime marginal cost curve for electricity and showing the size of the cost reductions.arrow_forwardCompare and contrast the difference between dynamic (intertemporal) efficiency and static efficiency with respect to non-renewable resources. a. What are the efficiency conditions for each? Explain your answer. b. What costs reflected in the inter-temporal analysis are not captured in the static analysis? Explain your answer. c. How does the discount rate factor into each analysis? d. What impact does the discount rate have on the allocation of non-renewable resources across time and long run price path of non-renewable resources? e. Discuss the ethical issues associated with economists use and choice of a discount rate when analyzing natural resource and environmental problems.arrow_forward
- Q) Economic Costs Owner/operators of small gas stations rarely pay themselves an hourly wage. How does this practice affect the economic cost of dispensing gasoline?arrow_forwardCurrently the Australian Government is aiming to reduce Australia's carbon emissions to 5% below 2000 emissions levels by 2020. Reforms A Emissions change (compared to 2000 10% increase levels) by 2020. Total cost for industries to introduce 0 reform measures (billions of dollars) B No change 0.3 с 5% reduction 1.2 D 10% reduction 1.5 a. If the Government introduced a permit system, resulting in total industry permit costs being $700 million, and capital investment total costs of $500 million, what would be the expected 2020 pollutions levels compared to 2000 levels? . Type LT for Less Than, E for Equal to, or GT = Greater Than. b. Consider the mining sector is responsible for 8% of Australia's overall industry carbon emissions. The Government decides to introduce the reform option D (10% reduction). How much would it cost the mining sector (including both permit and capital investment) as a result of introducing this reform? Assume the cost is directly proportionally to all industries…arrow_forwardOne way that damage can be reduced is for either the farmer or the rancher to install a fence. The farmer could build and maintain a fence that would keep out the cattle for an annual cost of $80. The cattle rancher could build and maintain a fence between the properties that would keep his cattle out of the farm for an annual cost of $60. If there is no fence, then marauding cattle will reduce the farmer's profit from grain-growing by $70 per year. Assume that the costs of bargaining between the farmer and the rancher are zero. This also implies costless litigation. If we are operating under Farmer's rights: Would the farmer build a fence? Would the rancher build a fence? What if we are operating under Rancher's rights: Would the farmer build a fence? Would the rancher build a fence? Reminder of definitions... Farmers' rights: if a farmer suffers damage from cattle wondering on to his property, he is entitled to be compensated for that damage--in other words, the rancher is…arrow_forward
- True/False? Discuss. If there weren’t diminishing marginal returns all the rice in the world could be grown in a one-gallon planter.arrow_forwardFarmers Al and Bob each operate a farm in the same Each farm uses water and fertilizer to produce both crops and polluted runoff (from nutrients in the fertilizer). Below are the marginal cost equations for abating (i.e., reducing) polluted runoff on each farm (you may find it helpful to think of these as marginal cost functions for “producing” abatement): Al’s marginal cost of abating runoff ($/unit) = 3 × Units of runoff abated by Al Bob’s marginal cost of abating runoff ($/unit) = 5 × Units of runoff abated by Bob Currently, Al and Bob each produce 20 units of polluted runoff (a total of 40 units) and neither abates any runoff. Suppose the local environmental protection agency wants to reduce the total amount of polluted runoff generated by Al and Bob to 20 units. In other words: Units of runoff abated by Al + Units of runoff abated by Bob = 20. Unfortunately, Al and Bob have a lot of political clout and won’t submit to any regulations or penalties that force them to reduce…arrow_forwardNote: Question 1 Robert Electronics produces CD players using an automated assembly line process. The standard cost of CD players is $300 per unit (labor, $60; materials $140; and overhead, $100. The sales price is $600 per unit. a. What is the multifactor productivity ratio for the CD players? b. What is the maximum total cost that could be spent in order to ensure a productivity increase to 2.20?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning