2. There are four firms in the widget market. Each of them emits five units of yuck, which are not currently regulated by the government. Each firm's total cost of abatement (cleaning up its yuck emissions) is listed in the table below. The government has just passed a new law limiting the total amount of allowable yuck to 10 units (for the entire industry). a. How much should each firm abate and why? Keep in mind that total emissions cannot exceed 10. b. What is the industry's total cost of abatement based on your allocation in a)? 0 2 3 4 Total cost of abatement 62 42 28 16 6 95 27 13 5 76 34 21 10 99 27 1 54 18 3 Each firm's total yuck emissions Firm A Firm B Firm C Firm D Firm E S 54 49 58 30 289

2. There are four firms in the widget market. Each of them emits five units of yuck, which are not currently regulated by the government. Each firm's total cost of abatement (cleaning up its yuck emissions) is listed in the table below. The government has just passed a new law limiting the total amount of allowable yuck to 10 units (for the entire industry). a. How much should each firm abate and why? Keep in mind that total emissions cannot exceed 10. b. What is the industry's total cost of abatement based on your allocation in a)? 0 2 3 4 Total cost of abatement 62 42 28 16 6 95 27 13 5 76 34 21 10 99 27 1 54 18 3 Each firm's total yuck emissions Firm A Firm B Firm C Firm D Firm E S 54 49 58 30 289

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In markets with strong network externalities: a. It is common for the market to be split equally across several firms. b. Market shares typically fluctuate in opposite directions, i.e. high market share today implies lower market share tomorrow. c. Market entry happens frequently. d. A single firm tends to dominate the market.
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QUESTION 6 Which of the following is an example of a barrier to entry? O a. All other options are the examples of barriers to entry. O b. A pharmaceutical company invented a new drug to cure lung cancer and got patent. OC. An author just got a copy right for her newly published book. O d. A cable company owns the exclusive rights to provide cable services in a county. QUESTION 7 There is only one cable TV provider in a small town. The cable TV provider in that area will face O a perfect competition. O a monopoly. O a government-regulated price. O a price decided by the industry. QUESTION 8 For a monopolist a profit-maximizing quantity will be where their O marginal revenue is less than marginal cost. O marginal revenue is greater than marginal cost. O marginal revenue is equal to marginal cost. O average revenue is greater than the average cost.
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Ilia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price. a. The most likely reason that the price is the same is that _gas stations always make a profit, so they can charge any price they want. _drivers need gas and are willing to pay whatever price a gas station charges. _government regulation requires both gas stations to charge the same price. _consumers view gasoline from different gas stations as perfect substitutes. b. If one station increases its price, _it will be fined by the government. _it will sell more gasoline. _it will make a higher profit. _it will lose customers to the cheaper station across the street.
How does the government regulate and deregulate? What are two examples of how the government regulates and deregulates the industry?
#4. If network externalities exist in an industry, the ________ firm to enter the market is often the one that succeeds in dominating the industry. a. first b. second c. third d. fourth e. fifth
1. In the market for steel pots for boiling water, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for steel pots is 200 per month when there is no tax. The government imposes a tax of Rs.5 per steel vessel. As a result, the government is able to raise Rs.800 per month in tax revenue. a. Please, specify new equilibrium quantity of steel pots (after tax) b. Draw a graph to show the new and old equilibrium quantity and the tax revenue (before and after-tax) C. Suppose you are told that the equilibrium price was Rs.100 when the tax was not imposed. With the tax now the buyer pays Rs.103 and the seller receives Rs.98. What is the loss in consumer and producer surplus? Show it on the graph. d. What is the loss in welfare? Explain. e You advise the government that instead of a tax on steel pots they should impose the tax on the steel industry to minimize the welfare loss.…
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