Unformatted text preview: to cut back its snippet production to 40? How much is the ﬁrm willing to accept? Is a bargain struck? What is the new social gain? 2. Use the graph from Problem 1. Assume there’s no possibility of bargaining and that it would cost the neighbors $3 to move away. a) If the ﬁrm faces no legal penalty for polluting, will the neighbors move? How many snippets are produced? What is the social gain? b) If the ﬁrm must reimburse the neighbors for all pollution damage, will the neigh-bors move? How many snippets are produced? What is the social gain? 3. A competitive ﬁrm faces the following total cost curve: Q TC 1 8 2 10 3 14 4 20 5 28 6 38 7 50 Suppose the price of the item is $6. Derive the ﬁrm’s marginal cost and marginal revenue tables. At what quantity is proﬁt maximized?...
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- Fall '06
- Economics, $3, $6, 6 Week, R.H. Snippet company