HW2,SP2000 - EEP101/ECON125 Spring 00 Prof D Zilberman GSIs...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
EEP101/ECON125 Spring 00 Prof.: D. Zilberman GSIs: Malick/McGregor/St-Pierre PROBLEM SET 2 Due Thursday, March 9, 2000 in class (Late assignments will not be graded) 1. Assume there are three polluting firms in the economy with marginal benefit curves given by: MB 1 = 75 – (5/4)q 1 for firm 1, MB 2 = 75 – q 2 for firm 2, and MB 3 = 75 – (3/4)q 3 where q i (i=1,2,3) is the amount of emissions produced by each firm. a) Find the aggregate marginal benefit curve. (Hint: Find the horizontal sum of the individual MB curves). Draw each of the four curves in a single graph. b) Which firm is more efficient in reducing pollution? Explain. c) If the marginal social cost curve is given by MSC = 30 + Q, what is the optimal level of emissions (Q*) to be produced? Show both the MSC curve and Q* on the same graph. d) What is the optimal tax to be levied to achieve Q*? Given this tax, find the amount of emissions produced by each firm, q* 1 , q* 2 , and q* 3 . Show these levels on the same graph.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern