ENGR.ECONOMIC ANALYSIS W/DASHBOARD
ENGR.ECONOMIC ANALYSIS W/DASHBOARD
14th Edition
ISBN: 9780190063467
Author: NEWNAN
Publisher: OXF
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Chapter 3, Problem 24P

(a)

To determine

The maturity value of $2442 placed in certificate of deposit (CD) for 10 years at 3.5% p.a. using formula.

(b)

To determine

The maturity value of $2442 placed in certificate of deposit (CD) for 10 years at 3.5% p.a. using interest tables and interpolation.

(c)

To determine

The maturity value of $2442 placed in certificate of deposit (CD) for 10 years at 3.5% p.a. using spreadsheet.

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Suppose there are two firms 1 and 2, whose abatement costs are given by c₁ (e₁) and C2 (е2), where e denotes emissions and subscripts denote the firm. We assume that c{(e) 0 for i = 1,2 and for any level of emission e we have c₁'(e) # c₂' (e). Furthermore, assume the two firms make different contributions towards pollution concentration in a nearby river captured by the transfer coefficients ε₁ and 2 such that for any level of emission e we have C₂'(e) # The regulator does not know the resulting C₁'(e) Τι environmental damages. Using an analytical approach explain carefully how the regulator may limit the concentration of pollution using (i) a Pigouvian tax scheme and (ii) uniform emissions standards. Discuss the cost-effectiveness of both approaches to control pollution.
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