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enyata [817]
3 years ago
13

There is an oil refinery located on a river. A fish farm is located in the bay, and is adversely affected by the oil refiner’s w

ater pollution. More oil produces more pollution, and more pollution increases the fish farmer’s costs. The price for refining a barrel of crude oil is po = 200, and the price of a unit of fish is pf = 500. Let o and f represent the quantities of oil refined and fish produced by the two firms, respectively. The oil refiner’s cost is Co(o) = o^2, and the fish farmer’s cost function is Cf(f,o) = f^2+o^2. The fact that o shows up in Cf reflects the negative externality.
(a) How much do the firms produce in a decentralized market equilibrium?

(b) Show that the decentralized market solution is Pareto inefficient.

(c) Find the Pareto efficient allocation of o.

(d) Suppose that the government imposes a tax on the oil refiner that makes the oil refiner pay $t per unit of output produced. Is there a t that induces the Pareto efficient level of o?

(e) Suppose that the fishery has the right to a pollution-free environment. Suppose that given this the fishery can bargain with the oil refiner over o, and suppose that the bargaining process is such that the fishery makes a take-it-or-leave it offer to the oil refiner, and the offer can either be accepted or rejected. The offer allows the refiner to produce a certain level of o in exchange for a payment from the refiner to the fishery. If the offer is rejected the oil refiner is not allowed to produce. What will be the outcome of this bargaining process in terms of the quantity of o produced?
Business
1 answer:
Galina-37 [17]3 years ago
6 0
D. Suppose that the government imposes a tax on the oil refiner that makes the oil refiner pay twice per unit of output produced. is there T that induces the Pareto efficient level of o
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if potential output declines while actual output remains unchanged, what does the Taylor rule imply that policymakers should do
Gekata [30.6K]

Answer:

Increased

Explanation:

In the case when there is a fall in the potential output and at the same time the actual output remains the same so here the fund rate should be increased as per the taylor rule as it decrease the output that result in the output gap to fall

So as per the given situation, the fed fund rate should be increased

Hence, the same is to be increased

4 0
2 years ago
Suppose an economic boom causes incomes to increase and, at the same time, drives up wages for the sales representatives who wor
Juli2301 [7.4K]

Answer:

Option (B) is correct.

Explanation:

Given that smartphones are a normal good and income of the individuals increases because of economic boom. We know that there is a direct relationship between the income of an individual and demand for normal goods.

Increase in the income level of the individuals will result in higher demand for smartphones. This will shift the demand curve of smartphones rightwards.

Simultaneously, the wages of sales representatives who work for cell phone companies also increases. This will increase the cost of production for the firms and shifts the supply curve of smartphones leftwards.

Hence, the equilibrium price of smartphones increases but the effect on equilibrium quantity is indeterminate because its effect will be depend upon the magnitude of the shift of supply and demand curve.

5 0
3 years ago
Distinguish between private and public company???​
Mashutka [201]

Answer:

-Private company has mininmum 1 and maximum 101 member.

Public company has minimum 7 member and maximum is bounded by its share capital.

-Private company is smaller than the public companies by the no.of capital.

Public company is larger than private company and spread in different place.

-Private company uses the term Private limited after its name.

Public company uses the term Limited after its name.

-Examples of Private company are: Asmita Book Publication Pvt.ltd and Karunanidhi Education Foundation Pvt.ltd

Examples of Public company are:Nepal oil corporation and Nepal electricity Authority.

5 0
2 years ago
Read 2 more answers
The Guitar Shoppe reports the following sales forecast: August, $110,000; September, $190,000. Total sales includes 30% cash sal
Snezhnost [94]

Answer:

The correct answer is $117,500

Explanation:

According to the scenario, the given data are as follows:

Sales for august = $110,000

Sales for September = $190,000

So, we can calculate the September cash receipts by using following formula:

Cash receipt from August = $110,000 × 55% = $60,500

Cash receipt from September = $190,000 × 30% = $57,000

Total cash receipt for September = Cash receipt from August + Cash receipt from September

= $60,500 + $57,000

= $117,500

4 0
3 years ago
Imperfect markets: do not exist in democracies. always result in supply exceeding demand. always result in demand exceeding supp
Korolek [52]

Answer:

The correct answer is: when buyers and sellers have influence on price.

Explanation:

The imperfect market situations exist when there are few buyers or sellers such that they are able to influence the market. For instance, in a perfectly competitive market, there is a large number of buyers and sellers. So, any single buyer or seller is not able to influence the market. The price and output are determined by the market forces.  

In an imperfect market such as monopoly or oligopoly, few firms exist so they are able to fix output and price on their own.

5 0
3 years ago
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