Explain the importance to protect the producers from the non – paying customers.

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Answer 1

Question

Chapter 5, Problem 1CQ

To determine

Explain the importance to protect the producers from the non – paying customers.

Expert Solution & Answer

Explanation of Solution

In the market, if the payment is not demanded for the goods and services, then the potential customers have large incentive to attempt a free ride in an economy. If the number of non – paying customers increase, then the sales revenue of sellers will decrease and be eliminated. It will lead to a decrease in the sellers’ incentive to supply the goods in the market.

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"Whether the regulator sells or gives away tradeable emission permits free of charge, the quantities of emissions produced by firms are the same." Assume that there are n identical profit-maximising firms where profit for each firm is given by π(e) with л'(e) > 0; π"(e) < 0 and e denotes emissions. Individual emissions summed over all firms gives E which generates environmental damages D(E). Show that the regulator achieves the optimal level of total pollution through a tradeable emission permit scheme, where the permits are distributed according to the following cases: Case (i) the firm purchases all permits; Case (ii) the firm receives all permits free; and Page 3 of 5 ES30031 Case (iii) the firm purchases a portion of its permits and receives the remainder free of charge.

Answer 2

Question

Chapter 5, Problem 1CQ

To determine

Explain the importance to protect the producers from the non – paying customers.

Expert Solution & Answer

Explanation of Solution

In the market, if the payment is not demanded for the goods and services, then the potential customers have large incentive to attempt a free ride in an economy. If the number of non – paying customers increase, then the sales revenue of sellers will decrease and be eliminated. It will lead to a decrease in the sellers’ incentive to supply the goods in the market.

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Answer 3

Question

Chapter 5, Problem 1CQ

To determine

Explain the importance to protect the producers from the non – paying customers.

Expert Solution & Answer

Explanation of Solution

In the market, if the payment is not demanded for the goods and services, then the potential customers have large incentive to attempt a free ride in an economy. If the number of non – paying customers increase, then the sales revenue of sellers will decrease and be eliminated. It will lead to a decrease in the sellers’ incentive to supply the goods in the market.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 5, Problem 1CQ

To determine

Explain the importance to protect the producers from the non – paying customers.

Expert Solution & Answer

Explanation of Solution

In the market, if the payment is not demanded for the goods and services, then the potential customers have large incentive to attempt a free ride in an economy. If the number of non – paying customers increase, then the sales revenue of sellers will decrease and be eliminated. It will lead to a decrease in the sellers’ incentive to supply the goods in the market.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 5, Problem 1CQ

To determine

Explain the importance to protect the producers from the non – paying customers.

Expert Solution & Answer

Explanation of Solution

In the market, if the payment is not demanded for the goods and services, then the potential customers have large incentive to attempt a free ride in an economy. If the number of non – paying customers increase, then the sales revenue of sellers will decrease and be eliminated. It will lead to a decrease in the sellers’ incentive to supply the goods in the market.

Answer 6

Chapter 5, Problem 1CQ

To determine

Explain the importance to protect the producers from the non – paying customers.

Expert Solution & Answer

Explanation of Solution

In the market, if the payment is not demanded for the goods and services, then the potential customers have large incentive to attempt a free ride in an economy. If the number of non – paying customers increase, then the sales revenue of sellers will decrease and be eliminated. It will lead to a decrease in the sellers’ incentive to supply the goods in the market.

Answer 7

Chapter 5, Problem 1CQ

To determine

Explain the importance to protect the producers from the non – paying customers.

Answer 8

Expert Solution & Answer

Explanation of Solution

In the market, if the payment is not demanded for the goods and services, then the potential customers have large incentive to attempt a free ride in an economy. If the number of non – paying customers increase, then the sales revenue of sellers will decrease and be eliminated. It will lead to a decrease in the sellers’ incentive to supply the goods in the market.