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Unformatted text preview: if you have more that 1000 tons of this type of pollution that it is fatal. Below that it is no problem at all. What are two solutions that the government could employ to solve the problem? Which is more efficient? 2. Consider the small land of Eatsalotoflettuce. They produce lettuce with a market price of $4 per bunch. a. Suppose that the world price of lettuce is $2. Show, on a well labeled graph, what happens to the market for lettuce in Eatsalotoflettuce when they open to the world market. Label prices, quantities, and the amounts of exports/imports. Do they import or export lettuce. b. What is consumer surplus, producer surplus, and total surplus before trade? c. What is consumer surplus, producer surplus, and total surplus after trade? d. Who gains and who loses from trade? e. Repeat the exercise assuming that the world price of lettuce is $7....
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This note was uploaded on 09/14/2009 for the course ECON 304K taught by Professor Ledyard during the Fall '08 term at University of Texas at Austin.
- Fall '08