Principles of Macroeconomics 2e
2nd Edition
ISBN: 9781947172388
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Chapter 9, Problem 6SCQ
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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 9 Solutions
Principles of Macroeconomics 2e
Ch. 9 - Table 22.4 shows the fruit prices that the typing...Ch. 9 - Construct the price index for a fruit basket in...Ch. 9 - Compute the inflation rate for fruit prices from...Ch. 9 - Edna is living in a retirement home where home...Ch. 9 - How to Measure Changes in the Cost of Living...Ch. 9 - The Consumer Price Index is subject to the...Ch. 9 - Go to this website...Ch. 9 - If inflation rises unexpectedly by 5, would a...Ch. 9 - How should an increase in inflation affect the...Ch. 9 - A fixed-rate mortgage has the same interest rate...
Ch. 9 - How do economists use a basket of goods and...Ch. 9 - Why do economists use index numbers to measure the...Ch. 9 - What is the difference between the price level and...Ch. 9 - Why does substitution bias arise if we calculate...Ch. 9 - Why does the quality/new goods bias arise if we...Ch. 9 - What has been a typical range of inflation in the...Ch. 9 - Over the last century, during what periods was the...Ch. 9 - What is deflation?Ch. 9 - Identity several parties likely to he helped and...Ch. 9 - What is indexing?Ch. 9 - Name several forms of indexing in the private and...Ch. 9 - Inflation rates, like most statistics, are...Ch. 9 - Given the federal budget deficit in recent years,...Ch. 9 - Why is the GDP deflator not an accurate measure of...Ch. 9 - Imagine that the government statisticians who...Ch. 9 - Describe a situation, either a government policy...Ch. 9 - Describe a situation, either a government policy...Ch. 9 - Why do you mink the U.S. experience with inflation...Ch. 9 - If, over time, wages and salaries on average rise...Ch. 9 - Who in an economy is the big winner from...Ch. 9 - If a government gains from unexpected inflation...Ch. 9 - Do you think perfect indexing is possible? Why or...Ch. 9 - The index number representing the price level...Ch. 9 - The total price of purchasing a basket of goods in...Ch. 9 - With in 1 or 2 percentage points, what has the...Ch. 9 - If inflation rises unexpectedly by 5, indicate for...Ch. 9 - Rosalie the Retiree knows that when she retires in...
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