Firms would produce safe space heaters as it is more efficient.

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Answer 1

Question

Chapter 17, Problem 11P

(a)

To determine

Firms would produce safe space heaters as it is more efficient.

(b)

To determine

Firms will sell safe space heaters only when the damages are not incurred by them

(c)

To determine

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

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Exercise 6 Imagine that you head production of a multinational food processing company. The ongoing uncer- tainty about costs means that you are unsure of the future cost of one of your inputs, x2. Your firm's production function is y = f(x1, x2) = x²x²² The output price p is 1000, x1 = 27, and wx₁ = 60. 1. Suppose the current input price is Wx2 = 50. Solve for the optimal choice of x2. 2. Now suppose that the probability the input price remains 50 is 0.65 and the probability that Wx2 60 is 0.35. Solve for the optimal choice of x2. Round down to the nearest integer. = 3. Finally, suppose the costs do actually rise, i.e., Wx2 = 60. Calculate the difference in profit from the uncertainty in (2) vs. the certainty in (1).

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Answer 2

Question

Chapter 17, Problem 11P

(a)

To determine

Firms would produce safe space heaters as it is more efficient.

(b)

To determine

Firms will sell safe space heaters only when the damages are not incurred by them

(c)

To determine

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

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Answer 3

Question

Chapter 17, Problem 11P

(a)

To determine

Firms would produce safe space heaters as it is more efficient.

(b)

To determine

Firms will sell safe space heaters only when the damages are not incurred by them

(c)

To determine

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 17, Problem 11P

(a)

To determine

Firms would produce safe space heaters as it is more efficient.

(b)

To determine

Firms will sell safe space heaters only when the damages are not incurred by them

(c)

To determine

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 17, Problem 11P

(a)

To determine

Firms would produce safe space heaters as it is more efficient.

(b)

To determine

Firms will sell safe space heaters only when the damages are not incurred by them

(c)

To determine

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

Answer 6

Chapter 17, Problem 11P

(a)

To determine

Firms would produce safe space heaters as it is more efficient.

Answer 7

Chapter 17, Problem 11P

(a)

To determine

Firms would produce safe space heaters as it is more efficient.

Answer 8

(b)

To determine

Firms will sell safe space heaters only when the damages are not incurred by them

Answer 9

(b)

To determine

Firms will sell safe space heaters only when the damages are not incurred by them

Answer 10

(c)

To determine

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

Answer 11

(c)

To determine

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 17 - Prob. 1Q Ch. 17 - Prob. 2Q Ch. 17 - Prob. 3Q Ch. 17 - Prob. 4Q Ch. 17 - Prob. 5Q Ch. 17 - Prob. 6Q Ch. 17 - Prob. 7Q Ch. 17 - Prob. 8Q Ch. 17 - Prob. 9Q Ch. 17 - Prob. 10Q

Firms would produce safe space heaters as it is more efficient.

Solution Summary: The author explains that firms would produce safe space heaters as it is more efficient, as the benefits earned overweigh production costs. Firms would sell safe spaces only when the damages are not incurred by them.

Firms would produce safe space heaters as it is more efficient.

Firms will sell safe space heaters only when the damages are not incurred by them

Firms will produce safe space heaters when the congress makes the firm liable for the damages incurred from the unsafe heaters.

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Chapter 17 Solutions