Homework Answers
Market failure in this market is negative externality.
Government can address this market failure by imposing taxes on company X where tax per unit should be equal to external cost produced per unit.
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Question 1 (4 points) Company X emits pollution when it produces its water bottles. What type...
A company produces reuseable water bottles. Their technology allows one worker to produce 10 water bottles...
A company produces reuseable water bottles. Their technology allows one worker to produce 10 water bottles in an hour. Hiring a second worker would allow them to produce 16 total water bottles in an hour and three workers can produce 18 total water bottles. What is the marginal benefit of hiring the second worker? A 10 B 16 C 6 D 2
Question 1 (30 points): Two different types of glass bottles, type 1 and type 2, are...
Question 1 (30 points): Two different types of glass bottles, type 1 and type 2, are suitable for use by a soft-drink beverage bottler. The internal pressure strength of the bottle is an important quality characteristic. From two random samples of the two bottle types of sizes n1 = n2 = 15 bottles, the average pressure strengths of the type 1 and 2 samples are observed to be 183 and 177 psi, respectively, and the standard deviations for the two...
Which of the following statements is (are) correct? (x) An externality is the uncompensated impact of...
Which of the following statements is (are) correct? (x) An externality is the uncompensated impact of one person’s actions on the well-being of a bystander. (y) An example of an externality that causes market failure is the case of a copper refinery that does not bear the entire cost of the smoke it emits. (z) If an externality, such as air or water pollution, is present in a market, economic efficiency may be enhanced by government intervention that reduces the...
Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units
5. Correcting for negative externalities - Regulation versus tradable permits Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution...
Suppose the government wants to reduce the total pollution emitted by three firms in its area
Suppose the government wants to reduce the total pollution emitted by three firms in its area. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. The government wants to reduce total pollution in the area to 6 units. In order to do so the government can choose between two methods: Under method 1, the governments sets pollution standards, whereas under method 2, the government allocated tradable pollution permits, Let’s compare...
1. A company produces a special new type of TV. The company has fixed costs of...
1. A company produces a special new type of TV. The company has fixed costs of $485,000, and it costs $1000 to produce each TV. The company projects that if it charges a price of $2400 for the TV, it will be able to sell 750 TVs. If the company wants to sell 800 TVs, however, it must lower the price to $2100. Assume a linear demand. What price should the company charge to earn a profit of $945,000? It...
A soda bottle company attempts to fill its bottles to exactly 16.0 ounces--STATUS QUO. What type...
A soda bottle company attempts to fill its bottles to exactly 16.0 ounces--STATUS QUO. What type of error would be made if the machine was filling the bottles to 15.5 ounces but the calibration device used to measure the fluid was incorrectly concluding that it was being filled to 16.0 ounces when it wasn't? As such, the company's bottles were actually short 0.5 ounces, and they would have the potential to be sued for false advertising. A Type I Error...
Bubble Company produces a variety of bottles from recycled plastic. The company has one particular machine...
Bubble Company produces a variety of bottles from recycled plastic. The company has one particular machine on which it can produce either of two types of water bottles, 1-liter bottles or 1/2-liter bottles. Sales demand for both products is such that the machine could operate at full capacity on either of the products, and Bubble can sell all output at current prices. One unit of the 1/2-liter product requires one hour of machine time per unit of output, and one...
Suppose the government wants to reduce the total pollution emitted by three firms In Rs brea....
Suppose the government wants to reduce the total pollution emitted by three firms In Rs brea. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. The government wants to reduce total pollution in the area to 6 units. In order to do so, the goverment can choose between the following two methods. Method 1: The government sets pollution standards. Method 2: The government allocates tradable pollution permits. Compare the two...
Question 4 As part of its plan to diversify the business lines, HHB has recently embarked...
Question 4 As part of its plan to diversify the business lines, HHB has recently embarked in a project to acquire a start-up enterprise specialising in bottled water manufacturing. It is expected that the enterprise is able to sell 4 million bottles per year at a net cash flow of $0.50 per bottle for the next five years. However, due to increased competition and unpredictable change in government regulations, demand for the product will be highly uncertain. They will learn...
Question 1 (30 points): Two different types of glass bottles, type 1 and type 2, are suitable for use by a soft-drink beverage bottler. The internal pressure strength of the bottle is an important quality characteristic. From two random samples of the two bottle types of sizes n1 = n2 = 15 bottles, the average pressure strengths of the type 1 and 2 samples are observed to be 183 and 177 psi, respectively, and the standard deviations for the two...
Bubble Company produces a variety of bottles from recycled plastic. The company has one particular machine on which it can produce either of two types of water bottles, 1-liter bottles or 1/2-liter bottles. Sales demand for both products is such that the machine could operate at full capacity on either of the products, and Bubble can sell all output at current prices. One unit of the 1/2-liter product requires one hour of machine time per unit of output, and one...
Suppose the government wants to reduce the total pollution emitted by three firms In Rs brea. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. The government wants to reduce total pollution in the area to 6 units. In order to do so, the goverment can choose between the following two methods. Method 1: The government sets pollution standards. Method 2: The government allocates tradable pollution permits. Compare the two...
Question 4 As part of its plan to diversify the business lines, HHB has recently embarked in a project to acquire a start-up enterprise specialising in bottled water manufacturing. It is expected that the enterprise is able to sell 4 million bottles per year at a net cash flow of $0.50 per bottle for the next five years. However, due to increased competition and unpredictable change in government regulations, demand for the product will be highly uncertain. They will learn...
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