Lec 18 Questions

Lec 18 Questions - Econ 101 Class 18 Questions 1. The...

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Econ 101 Class 18 Questions 1. The following table gives the value of a mill and the value of a fishery as a function of the mill’s pollution decision Pollution Decision Value of Mill Value of Fishery High Discharge Rate $5000 $2000 Low Discharge Rate $1000 $3000 If the Fishery has the right to block the mill from a high rate of discharge of pollution then… A. The Fishery will prefer to exercise its right and keep pollution low. B. The Fishery will achieve the social optimum by keeping pollution low. C. The Mill will pay the Fishery over $4000 for the right to pollute. Fishery will go out of business because of pollution. D. The Mill will achieve the social optimum by buying the right to pollute from the Fishery. ** 2. Suppose three companies in the Ohio Valley each produce 1000 tons of S02 per year. The EPA has decided to reduce emissions by 1200 tons per year. The following table gives the marginal cost per ton of reducing emissions. SO2 Reduction Marginal Cost per Ton of SO2 Reduction Firm A
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This note was uploaded on 03/02/2009 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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