Two firms, A and B, each currently dump 70 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into theriver. It costs Firm A$150 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $75 for each ton of pollution that it eliminates before it reaches the river. The government gives each firm 30pollution permits. Government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. What is the total cost of reducing pollution if firms are not allowed to buy and sell pollutionpermits from each other? What is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other?O $6000; $3000O $9000; $6750O $4500; $2500O $9000; $9000

Financial experts are generally worried about contrasting the peripheral advantages with the…

s Firm A $150 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $75 for each ton of pollution that it eliminates before it r rmits. Government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. What is the total cost of reducing pollution n each other? What is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other? $3000 $6750

s Firm A $150 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $75 for each ton of pollution that it eliminates before it r rmits. Government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. What is the total cost of reducing pollution n each other? What is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other? $3000 $6750

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter28: Antitrust And Regulation

Section: Chapter Questions

Problem 4E

See similar textbooks

Similar questions

Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Rochelle and Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The town's weekly demand schedule and total revenue schedule for water is shown in the following table: Quantity (Gallons) 0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 Table 17-1 Price Refer to Table 17-1. What is the socially efficient quantity of water? Ca. 600 gallons Ob. 900 gallons Oc. 1,200 gallons Od. 0 gallons (Dollars per gallon) 60 55 50 45 40 35 30 25 20 15 10 5 0 Total Revenue and Total Profit (Dollars) 0 5,500 10,000 13,500 16,000 17,500 18,000 17,500 16,000 13,500 10,000 5,500 0
The town has a campground whose visitors use the lake for recreation. The town also has a research lab that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the research lab's waste decreases the campground's economic profit. Suppose that the research lab could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the campground would no longer be affected. If the research lab uses the recycling method, then the research lab's economic profit is $1,300 per week, and the campground's economic profit is $2,300 per week. If the research lab does not use the recycling method, then the research lab's economic profit is $2,100 per week, and the campground's economic profit is $1,100 per week. These figures are summarized in the following table. NOTE: Choice for first fill-in-blank is (not used or used), for the second its (not use…
G.232.
The town of Cleanville lies next to a lake, which the residents of the town use for fishing, boating, and other recreational activities. Last year, two firms, Filth Inc. and Sludge Inc., built factories on the other side of the lake and have been dumping trash into it. Although some of the trash will dissipate naturally, the amount of trash the two firms emit is too much for the lake to handle. Right now, each firm dumps 40 pounds of trash in the lake each year (total of 80 pounds). Environmental scientists in Cleanville estimate that the lake can handle only 30 pounds of trash per year. The table below reports the marginal costs to the two firms of reducing trash. The marginal cost numbers tell us how much it would cost to reduce the marginal five pounds of trash. Therefore, Filth Inc.'s marginal cost of reducing the first 5 pounds is $2,000 and the next 5 pounds $4,000. Therefore, the total cost to reduce 10 pounds is $6,000. Suppose the city council agrees with the scientists'…
Imagine a small town in which only two residents, Tony and Jill, own wells that produce safe drinking water. Each week Tony and Jill work together to decide how many gallons of water to pump, to bring the water to town, and to sell it at whatever price the market will bear. To keep things simple, suppose that Tony and Jill can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below. Weekly Quantity (in gallons) Weekly Total Revenue Price (and Total Profit) $0 $12 10 11 110 20 10 200 30 9. 270 40 8 320 50 7 350 60 360 70 5 350 80 4 320 90 3 270 100 2 200 110 1 110 120 Suppose the town enacts new antitrust laws that prohibit Tony and Jill from operating as a monopolist. What will the new price of water end up being once the Nash equilibrium is reached? Select one: a. $6 b. $3 c. $5 d. $4
Consider a lake found in the town of Center Barnstead, and then answer the questions that follow. The town has a water park whose visitors use the lake for recreation. The town also has a ketchup factory that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the ketchup factory's waste decreases the water park's economic profit. Suppose that the ketchup factory could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the water park would no longer be affected. If the ketchup factory uses the recycling method, then the ketchup factory's economic profit is $900 per week, and the water park's economic profit is $2,600 per week. If the ketchup factory does not use the recycling method, then the ketchup factory's economic profit is $1,600 per week, and the water park's economic profit is $1,500 per week. These figures are…
Suppose that there are two competing types of high-definition DVD players, Greenbeam and Mosdef, and each uses a different format. The DVD players are subject to network externalities: the more people who use one type of player, the more production companies adopt that particular format for their movies, and the greater the value of that player to each user. Greenbeam and Mosdef entered the market at around the same time. Which of the following is likely to happen if Greenbeam sells its DVD players at its profit-maximizing price, but Mosdef sells its DVD players at a much lower price than Greenbeam's at the early stages? 1 O Mosdef will dominate the market for high-definition DVD players. O Greenbeam will dominate the market for high-definition DVD players. O Greenbeam and Mosdef will have equal market shares. O Neither Greenbeam nor Mosdef will succeed, and a new company could easily enter and dominate the market. Tr
Suppose that there are two competing types of high-definition DVD players, Greenbeam and Mosdef, and each uses a different format. The DVD players are subject to network externalities: the more people who use one type of player, the more production companies adopt that particular format for their movies, and the greater the value of that player to each user. Greenbeam and Mosdef entered the market at around the same time. Which of the following is likely to happen if Greenbeam sells its DVD players at its profit-maximizing price, but Mosdef sells its DVD players at a much lower price than Greenbeam's at the early stages? O Mosdef will dominate the market for high-definition DVD players. O Greenbeam will dominate the market for high-definition DVD players. Greenbeam and Mosdef will have equal market shares. O Neither Greenbeam nor Mosdef will succeed, and a new company could easily enter and dominate the market. OO
Four firms called Elm, Maple, Oak, and Cherry, produce wooden chairs. However, they also produce a great deal of garbage (a mixture of glue, varnish, sandpaper, and wood scraps). The first row of the table below shows the total amount of garbage (in tons) that each firm currently produces. The other rows of the table show the cost of reducing garbage produced by the first five tons, the second five tons, and so on. Elm Maple Oak Cherry Current production of garbage (in tons) 20 40 60 80 Cost of reducing garbage by first five tons $5,500 $6,300 $7,200 $3,000 Cost of reducing garbage by second five tons $6,000 $7,200 $7,500 $4,000 Cost of reducing garbage by third five tons $6,500 $8,100 $7,800 $5,000 Cost of reducing garbage by fouth five tons $7,000 $9,000 $8,100 $6,000 Cost of reducing garbage by fifth five tons $0 $9,900 $8,400 $7,000 Calculate the cost of requiring the Maple firm to reduce the weight of its garbage by one-fourth. Please format your answer as…
Imagine a small town in a remote area where only two residents, Maria and Miguel, own dairies that produce milk that is safe to drink. Each week Maria and Miguel work together to decide how many gallons of milk to produce. They bring milk to town and sell it at whatever price the market will bear. To keep things simple, suppose that Maria and Miguel can produce as much milk as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for milk is shown in the table below: Quantity (in gallons) 10 |1 O b. $12 O c. $10 d. S8 2 113 14 לן 16 17 18 19 10 11 12 Price $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Total Revenue (and Total Profit) $0 $22 $40 $54 $64 $70 $72 $70 $64 $54 $40 $22 $0 Refer to Table 17-3. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a monopoly. What will be the price of milk once Maria and Miguel reach a Nash equilibrium? a. $14
Years ago, Callaway Golf patented its signature Big Bertha line of drivers. Today, the company spends a lot of money prosecuting individuals that try to sell knock off Big Bertha drivers to the public. What is the purpose of the patent, and why do companies like Callaway Golf fight those that try to imitate their products?
At NEW YORK Terminal there is a car park for buses that receive arriving passengers. The car park is so small that many buses cannot pass at the same time. Therefore, the government decided to grant a certain number of bus companies a license to operate their buses in the car park and thus they have one license to run between the airport and Downtown NYC with passengers. Such permits have now been allocated and not everyone got what they wanted. a) Show in the pictures what effect this barrier of entry has on consumer benefits and producer benefits for business benefits and how these restrictions affect market prices. Show on a picture. It is assumed that the marginal costs of the companies are traditional, increasing and the average cost is U-shaped. Show the companies' profits in a picture.