Mr permise states I do not understand why anyone would suggest the use of taxes or regulations in pollution problems. Taxes are unfair and regulations are costly and inefficient. The best approach is to trust the market. Firms will control their emissons because it is cost effective for them to do so. The only policy they may need to applied is the use of market permits. Thismarket would function completely and permit prices would clearly represent all revlevant costs Discuss this statement
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- Assuming you are the managing director of a firm that produces three goods: A, Band C. The price elasticity of demand for A is 1.2, for B it is 1.00 and for C it is 0.75.It is known that he firm is experiencing serious cash flow problems and you have toincrease total revenue as soon as possible. If you were in a position to set the pricesfor these goods, what would be your pricing strategy for each productD. Determine and compare the amount of consumer surplus and producer surplus if the service is provided by competitive firms and by the monopolist.Gouge-em Cable Company is the only cable television servicecompany licensed to operate in Backwater County. Most of itscosts are access fees and maintenance expenses. These fixed costs total $640,000 monthly. The marginal cost of addinganother subscriber to its system is constant at $2 per month.Gouge-em’s demand curve can be determined from the datain the accompanying table. a. What price will Gouge-em charge for its cable services?What are its profits at this price?b. Now suppose the Backwater County Public UtilityCommission has the data and believes that cablesubscription rates in the county are too expensive and thatGouge-em’s profits are unfairly high. What regulated pricewill it set so that Gouge-em makes only a normal rate ofreturn on its investment?
- e ap sep 0 ja ajaloo Purwas ap o Consider a town in which only two residents, Clancy and Eileen, own wells that produce water safe for drinking. Clancy and Eileen can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Tab Caps Lock Price (Dollars per gallon) 6.00 5.50 5.00 4.50 Esc is 81°F Sunny 4.00 3.50 3.00 2.50 2.00 1.50 1.00 ! 0.50 0 7 Q A Quantity Demanded (Gallons of water) 0 45 17 F2 8- @ Suppose Clancy and Eileen form a cartel and behave as a monopolist. The profit-maximizing price is $ gallons. As part of their cartel agreement, Clancy and Eileen agree to split production equally. Therefore, Clancy's profit is - C VE 2 W 90 135 S. 180 225 270 315 360 405 450 495 540 F3 0+ #M 3 Total Revenue (Dollars) 0 $247.50 $450.00 $607.50 $720.00 $787.50 $810.00 $787.50 $720.00 $607.50 E F4 BO $450.00 $247.50 0 D $ 4 F5 R F % 5 F6 D T F7 ^ 6 G 4- Y FB J+ & 7 per gallon, and the total…$6.00 $4.50 МС АТC $3.50 $3.00 $2.50 $2.00 $1.00 MR 10 20 30 40 50 60 70 80 90 Quantity If the government regulates the monopolist to produce the allocatively efficient quantity and provides a subsidy sufficient to maintain zero econornic profits for the firm, what price would the government set and what level of output would the firm produce? $1.00 and 50 в $2.00 and 80 $3.00 and 50 D $3.50 and 50 E $4.50 and 30 P Type here to search 21/04 8 Price, CostThere are 10 households in Lake Wobegon, Minnesota, each with a demand for electricity of Q- 60 - P. Lake Wobegon Electric's (LWE) cost of producing electricty is TC = 600 + 20. a. If the regulators of LWE want to make sure that there is no deadweight loss in this market, what price will they force LWE to charge? What will output be in that case? Calculate consumer surplus and LWE's profit with that price. (Round all responses to two decimal places.) The regulated price would be s2, and the firm would produce 580' units of electricity. Total consumer surplus would be $ 16,820, and the firm would earn a S - 600 profit. b. If reguiators want to ensure that LWE doesn't kose money, what is the lowest price they can impose? Calculate output, consumer surplus, and profit. Is there any deadweight loss? (Round all responses to two decimal places.) The regulated price would be $ and the firm would produce units of alectricity. Total consumer surplus would be $, and the firm would earn a s…
- Which of the following are nontariff barriers O A. Product standards O B. Approval procedures O C. Subsidies D. Bureaucratic red tape E. All of the above are nontariff barriers F. None of the above are nontariff barriersThe Private Express Statutes, passed in 1792 and (in amended form) still in effect today, contain federal civil and criminal laws relating to the delivery of mail. The statutes grant monopoly powers to the U.S. Postal Service. Given the technology available today, the average effect of this monopoly on the price and quality of mail service in the populated parts of the United States is that the __ because of the monopoly privilege of the USPS. O price is higher and the quality of service is lower O price is lower and the quality of service is higher O price and quality of service are lower O price and quality of service are higherSuppose that the quantity demanded of good X rises from 90 units to 110 units when its orice falls from $1.20 to 00 cents per unit long the are-elembory a demand/mid-point method, the own- price elasticity (absolute value only) of demand for this product is Select one a. 1 b. 4 c 0.75 Od 0.5 e2
- Many schemes for price discrimination involvesome cost. For example, discount coupons take upthe time and resources of both the buyer and theseller. This question considers the implications ofcostly price discrimination. To keep things simple,let’s assume that our monopolist’s production costsare simply proportional to output so that averagetotal cost and marginal cost are constant and equalto each other.a. Draw the cost, demand, and marginal-revenuecurves for the monopolist. Show the pricethe monopolist would charge without pricediscrimination.b. In your diagram, mark the area equal to themonopolist’s profit and call it X. Mark thearea equal to consumer surplus and call it Y.Mark the area equal to the deadweight loss andcall it Z.c. Now suppose that the monopolist can perfectlyprice discriminate. What is the monopolist’sprofit? (Give your answer in terms of X, Y,and Z.)d. What is the change in the monopolist’s profit fromprice discrimination? What is the change in totalsurplus from…a What is equilibrium price and quantit y be ina competitive A monopolist have a demand curve p= 30 -1-5Q (and hence a marginal curve MR= 30 - 3Q) and a constant Marginal cost of 12: a What is equilibrium price and quantit y be ina competitive industry ? 6. What is the maximum profit of the monopolist C. What would be social gain be if this monopolist were torced to produce and pric e at the competitive equilibriun? who would gan and lose as aresult?1. Classify the following as a government-enforced barrier to entry, a barrier to entry that is not government-enforced, or a situation that does not involve a barrier to entry. a. A patented inventionb. A popular but easily copied restaurant recipec. An industry where economies of scale are very small compared to the size of demand in the marketd. A well-established reputation for slashing prices in response to new entrye. A well-respected brand name that has been carefully built up over many years