f i 5.8% per semiannual, compounded monthly, What is the nominal quarter rat
If i 5.8% per semiannual, compounded monthly, What is the nominal quarter rate.
(ABET, SO1)
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2.4
Water is produced and sold by the government. Demand for water is represented by the
linear function Q=50-2P. The total cost function for water production is also a linear function: TC(Q)= 100+ 100. You will also need to work out both the average cost of production, denoted by AC(Q), equal to the total cost of producing a quantity of output divided by that quantity of output, TC(Q)/Q, and the marginal cost of production, denoted by MC(Q), which is the additional cost incurred to produce one more unit.
a. What fee should the government charge per unit of water in order to reach the efficient allocation?
b. How much should it charge if it wishes to maximize profit from the sale of water?
C. What is the value of the efficiency loss that results from charging the price in part b rather than the price determined in part a?
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