Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 7, Problem 14RQ
How do we calculate marginal product?
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3. Consider the market for paper. The process of producing paper creates pollution. Assume that
the marginal damage function for pollution is given by:
MDF = 3E
where damages are measured in dollars and E is the level of emissions. Assume further that the
function describing the marginal abatement cost of emissions is given by
MAC 120-E
where benefits are measured in dollars and E is the level of emissions.
a. Graph the marginal damage function (MDF) and the marginal abatement cost function
(MAC).
b. What is the unregulated level of emissions Eu? What is the social welfare of this emissions
level?
c. Assume an existing emission quota limits emissions to E = 60. Show on the graph why this
policy is inefficient. What is the deadweight loss caused by this policy?
show written calculation for B
Problem 1:
1. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate
present value of the stock, given that the discount rate is 5%?
2. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate
present value of the stock, given that the discount rate is 8%?
3. If a stock is expected to pay an annual dividend of $20 this year, what is the approximate
present value of the stock, given that the discount rate is 8% and dividends are expected to
grow at a rate of 2% per year?
Chapter 7 Solutions
Principles of Economics 2e
Ch. 7 - A firm had sales revenue of 1 million last year....Ch. 7 - Continuing from Exercise 7.1, the films factory...Ch. 7 - The WipeOut Ski Company manufactures skis for...Ch. 7 - Based on your answers to the WipeOut Ski Company...Ch. 7 - If two painters can paint 200 square feet of wall...Ch. 7 - Return to the problem explained in Table 7.13 and...Ch. 7 - Suppose the cost of machines increases to 55,...Ch. 7 - Automobile manufacturing is an industry subject to...Ch. 7 - What are explicit and implicit costs?Ch. 7 - Would you consider an interest payment on a loan...
Ch. 7 - What is die difference between accounting and...Ch. 7 - What is a production function?Ch. 7 - What is the difference between a fixed input and a...Ch. 7 - How do we calculate marginal product?Ch. 7 - What shapes would you generally expect a total...Ch. 7 - What are the factor payments for land, labor, and...Ch. 7 - What is the difference between fixed costs and...Ch. 7 - How do we calculate each of the following:...Ch. 7 - What shapes would you generally expect each of the...Ch. 7 - Are there fixed costs in the lung-run? Explain...Ch. 7 - Are fixed costs also sunk costs? Explain.Ch. 7 - What are diminishing marginal returns as they...Ch. 7 - Which costs are measured on per-unit basis: fixed...Ch. 7 - What is a production technology?Ch. 7 - In choosing a production technology, how will...Ch. 7 - What is a long-run average cost curve?Ch. 7 - What is the difference between economies of scale,...Ch. 7 - What shape of a long-run average cost curve...Ch. 7 - Why will firms in most markets be located at or...Ch. 7 - Small Mom and Pop firms, like inner city grocery...Ch. 7 - A common name for fixed cost is overhead. If you...Ch. 7 - How does fixed cost affect marginal cost? Why is...Ch. 7 - Average cost curves (except for avenge fixed cost)...Ch. 7 - What is the relationship between marginal product...Ch. 7 - It is clear that businesses operate in the short...Ch. 7 - Retune to Table 7.2. In the top half of the table,...Ch. 7 - How would an improvement in technology, like the...Ch. 7 - Do you think that the taxicab industry in large...Ch. 7 - A firm is considering an investment that will earn...Ch. 7 - Return to Figure 7.7. What is the marginal gain in...Ch. 7 - Compute the average total cost, average variable...Ch. 7 - A small company that shovels sidewalks and...
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