Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted.Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Industrio ($/day) $350$400$500$700$1,000 Cost to Capitalista
($/day) $225$250$290$400 $600Suppose the government decides to auction 6 permits. The government conducts the auction by starting at a price of $1 and asking how many permits each firm wants to buy at that price. If the total is more than 6, it raises the price by $1 and asks again until the total quantity demanded falls to 6. Under this system, each permit will sell for ________ with Industrio buying ________ and Capitalista buying ________.
A. $41; 4; 2
B. $31; 2; 4
C. $101; 3; 3
D. $51; 4; 2
Answer: A
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In stage III of the demographic transition,
(a) the birth rate and the death rate are relatively low. (b) the birth rate and the death rate are relatively high. (c) the birth rate is relatively high and the death rate is relatively low. (d) the birth rate is relatively low and the death rate is relatively high.
Robin owns a horse stables and riding academy and gives riding lessons for children at "pony camp.". Her business operates in a competitive industry. Robin gives riding lessons to 20 children per month. Her monthly total revenue is $4,000 . The marginal cost of pony camp is $250 per child. In order to maximize profits, Robin should
a. give riding lessons to more than 20 children per month. b. give riding lessons to fewer than 20 children per month. c. continue to give riding lessons to 20 children per month. d. We do not have enough information to answer the question.
Diseconomies of scale occur
A. only in the long run. B. because of fixed costs. C. only in the short run. D. none of these.
Kathleen likes avocado and crab dip. After eating avocado and crab dip with four crackers, she switches to cheese with crackers. We can conclude that
A. Kathleen is no longer maximizing her utility. B. at this point cheese and crackers have a higher marginal utility per dollar spent than that of avocado and crab dip with crackers. C. the avocado and crab dip cannot have tasted that good. D. the avocado and crab dip with crackers now has a marginal utility of zero.