Two firms are ordered by the federal government to reduce their pollution levels. Firm A's marginal costs associated with pollution reduction is MC=20+4Q and firm B's MC=10+8Q. The marginal benefit of pollution reduction is MB=400-4Q.
Compare the social efficiency of three possible outcomes: require all firms to reduce pollution by the same amount; charge a common tax per unit of pollution; or require all firms to reduce pollution by the same amount, but allow pollution permits to be bought and sold.© BrainMass Inc. brainmass.com October 24, 2018, 10:02 pm ad1c9bdddf
Please find the answer attached.
MC = 20 + 4Q1
MC = 10 + 8Q2
MB = 400 - 4Q
1. Require all firms to reduce pollution by the same amount
For MB = MC,
Total MC = Total MB
Thus 30 + 4Q1 + 8Q2 = 400 - 4Q1 - 4Q2
Q1 = Q2
Thus Q1 = ...
Fully answered Solution
Short answer questions in economics: economics, market economy, command economy,supply and demand
Questions (also attached):
1) What is economics?
2) What types of things are considered in economics? What is not?
3) What role does economics play in your personal decisions?
4) What are the advantages of a market versus a command economy?
1. What is the difference between the shift of and a movement along the demand curve?
2. What is the difference between the shift of and a movement along the supply curve?
3. How do shortages and surpluses develop?
4. What types of shortages and surpluses affect you either personally or in your work environment?
2. Answer the following questions:
a. What causes the changes in supply and demand?
b. How do shifts in supply and demand affect your decision making?
c. List four key points in the study of economics.