1. Economics
2. Applied Economics
3. Labour Economics
4. 220504

1) FILL IN THE HIGHLIGHTED BOXES
WORKERS WAGE RATE TOTAL LABOR COST MARGINAL FACTOR COST

1 $ 12.00 $ 12.00
2 $ 12.10 $ 24.20
3 $ 12.20
4 $ 12.60

3) Using the following data, prove that pollution permits that can be bought and sold can reduce pollution from 12 units to 6 units at a lower cost than a regulation that specifies each of the three firms must cut its pollution in half.
FIRM X FIRM Y FIRM Z

Cost of Eliminating:

First unit of Polution $ 200 $ 500 $ 1,000
Second unit of Polution 300 700 2,000
Third unit of Polution 400 800 2,900
Fourth unit of Polution 500 900 3,400

Attachments

• 1and3.doc