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    Question about Report to management

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    You've been hired by an unprofitable firm to determine whether it should shut down its unprofitable operation.

    The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage (per worker) is $80, and the price of the firm's output is $25. The cost of other variable inputs is $400,000 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue.

    Provide a report to management of the firm as to whether or not it should continue to operate at a loss? Be sure to show your work to support the decision you outlined in your report.

    Sometimes market activities (production, buying and selling) have unintended positive or negative effects outside the market's scope. This is called an externality. Suppose that you are a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant. What tools would you use? What would be the benefits of the action? What would be the costs? How would you decide what was the best level of emission reduction? Why do you think your approach would be better than others? (hint: see chapter 31)

    Suppose the price of apples rises from $3 a pound to $3.50 and your consumption of apples drops from 35 pounds of apples a month to 20 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure to show the work you used to support your answer.

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    Solution Preview

    The response addresses the queries posted in 471 words with references.

    //Before writing about the 'Tools for Minimizing the Effect of Market Activities', it is crucial to have knowledge about the market activities, which causes positive, as well as, negative effect. One should know about the causes for making policy in an effective manner.//

    DB: Tools to reduce the Effect of Gases & Particulates

    The market activities of local power plant are causing a spill over cost for the people because they are bearing the environmental pollution due to the gases and particulates emitted by it. As a policy maker, to correct the effects of gases and particulates that are emitted by the local power plant, we can use an effective environment policy. The use of particular products should be banned that are caused for the more gas and particulates emission. The use of natural gas should be increased. To reduce the level of emission, a policy can be applied that is to use a fully develop top floor lab and roof top outdoor platform in smoke emitted companies. Some specific emission limit, technology standards can also be applied.

    //Above is the discussion of market activities and policy for minimizing the effects of market activities. Now as per the directions, I will discuss about the benefit, cost of the action and approaches.//

    This action will be beneficial because the effects of gases and particulates will be reduced and the pollution will ...

    Solution Summary

    The solution analyzes a report to management. This response clearly addresses all the three queries, APA Reference