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Unformatted text preview: pollution-reducting-captial on its axes (b) If two dierent rms have dierently shaped iso-quant curves, would the best method of reducing pollution require each to product equal amounts of CO 2 per unit of production? Why or why not? 5. What is the present value of $100 paid out each period forever (begininng at the end of the rst period) if the interest rate is 10%? 6. Suppose a lottery pays $100 with probability 1/4 and $0 with probability 3/4. (a) What is the expected income from the lottery? (b) Give a formula for the expected utility from the lottery. (c) Which is likely to be higher, expected income or expected utility? 1...
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- Fall '07