Principles of Microeconomics (12th Edition)
12th Edition
ISBN: 9780134081199
Author: CASE
Publisher: PEARSON
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Chapter 9.A, Problem 4P
To determine
Internal and external diseconomies of scale.
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A grape grower with a vineyard in the Edna Valley and in the Carneros appellation in Sonoma/Napa has a contract to produce 18 tons of pinot noir grapes for Gallo. The current allocation of the 18 tons results in a marginal cost of production in the Edna Valley vineyard of
$800 (MCev = $800) and a marginal cost of production in the Carneros vineyard of $1200 (MCc
= $1200). Explain whether the grower should move one ton of production from the Edna Valley to Carneros or vice versa. Make sure to provide a clear explanation of the outcome consistent with the idea of the equimarginal principle. Make sure to use the correct terms and units.
I need help. If you can explain the process and not just give the solution, I would appreciate it, because I'll learn better. A coal-fired power plant produces electricity for a town with a population of 1000. The retail price of electricity is sustained at $50.00, but every unit of electricity emission may cause damage and increased mortality risk of this amount $0.01 for every member of the town next to the plant. With a marginal cost curve MC=q and q is considered the output, what is the marginal damage of every or each unit of emission? What is the optimal quantity output for society? Is there a deadweight loss? When the electric plant decides to maximize profit and chooses q (in the cost curve), what would be the outcome?
Distinguish between economies and diseconomies of scale, ensuring to differentiate between internal and external economies and diseconomies of scale.
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Principles of Microeconomics (12th Edition)
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