If each firm’s production is associated with the release of 50 units of effluent, how much will each pay in total effluent fees when facing the $90 marginal effluent fee?

Among the identified point sources contributing to the pollution of Puget Sound are Dow Chemical (D) and Chevron (C). Each firm's cost functions are shown below.

MACD = 2.5AD MACC = 3.75AC
TACD = 1.25AD2 TACC = 1.875AC2

To meet the effluent limits under the Clean Water Act, each firm has an NPDES permit to release some fixed amount of effluents, so each must abate 30 units.


Dow pays the fee on all units above 36, or $90(50 – 36) = $1,260

Chevron pays the fee on all units above 24, or $90 (50 – 24) = $2,340

Economics

You might also like to view...

Of the following, the country with the highest average income per day in the world is

A) Japan. B) the United States. C) France. D) Germany. E) China.

Economics

Today, you might be buying from a regulated natural monopoly when you purchase

A) a car, a truck, or a bicycle. B) a computer, a phone, or a camera. C) natural gas or electricity. D) a house, a condominium, or a plot of land. E) food in a grocery store or in a restaurant.

Economics

The money supply increases when the Fed

a. buys bonds. The increase will be larger, the smaller is the reserve ratio. b. buys bonds. The increase will be larger, the larger is the reserve ratio. c. sells bonds. The increase will be larger, the smaller is the reserve ratio. d. sells bonds. The increase will be larger, the larger is the reserve ratio.

Economics

Recent estimates of the elasticity of demand for cigarettes by adults

A. shows that it has remained remarkably constant, despite the existence of e-cigarettes. B. shows that it has increased by only a small (and insignificant) amount. C. shows that it has declined markedly, in part because of the existence of e-cigarettes. D. shows that it has increased markedly, in part because of the existence of e-cigarettes.

Economics