BA. How is the Pigou tax computed (write down carefully the way it is computed in a simple two-firm competitive environment)? What is its aim? 6B. The preferences of agents A and B are representable by expected utility functious such that uA(z) - 5z/3 + 30, and un(z) - kr following allocation of the expected returns of a risky joint investment of A and B as represented by lottery L= ((:1500), (:120)) is Pareto-efficient: (a) ZA = (500,100), zn (b) ZA - (100,100), rp (c) ZA (d) ZA - (750,60), n (e) NOPAC. 20. Then, the (1000,20) (1300,20) (80,80), n - (1420,40) (750,00)

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6A. How is the Pigou tax computed (write down carefully the way it is
computed in a simple two-firm competitive environment)? What is its aim?
6B. The preferences of agents A and B are representable by expected utility
functions such that ua(z) - 5z/3 + 30, and up(z)
following allocation of the expected returns of a risky joint investment of A and
B as represented by lottery L= (:1500), (:120)) is Pareto-efficient:
(a) ZA = (500,100), zn - (1000,20)
(b) ZA = (100,100), ra= (1300,20)
(c) A = (80,80), rB - (1420,40)
(d) FA = (750,60), an- (750,60)
(e) NOPAC.
ka - 20. Then, the
%3D
Transcribed Image Text:6A. How is the Pigou tax computed (write down carefully the way it is computed in a simple two-firm competitive environment)? What is its aim? 6B. The preferences of agents A and B are representable by expected utility functions such that ua(z) - 5z/3 + 30, and up(z) following allocation of the expected returns of a risky joint investment of A and B as represented by lottery L= (:1500), (:120)) is Pareto-efficient: (a) ZA = (500,100), zn - (1000,20) (b) ZA = (100,100), ra= (1300,20) (c) A = (80,80), rB - (1420,40) (d) FA = (750,60), an- (750,60) (e) NOPAC. ka - 20. Then, the %3D
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