a. What is the efficient outcome (the maximum of total joint profit)? b. What are the outcomes under the two different property rights regimes, when there is no possibility of bargaining? How does your answer to (b) change when the two firms can bargain costlessly? C.

a. What is the efficient outcome (the maximum of total joint profit)? b. What are the outcomes under the two different property rights regimes, when there is no possibility of bargaining? How does your answer to (b) change when the two firms can bargain costlessly? C.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 5PA

See similar textbooks

Related questions

Q: . Adjust the accompanying diagram to reflect this development. Set point A at the new combination of…

A: It is given that the economy is in macroeconomic equilibrium, meaning that the level of output(GDP)…

Q: The following graph shows a hypothetical aggregate demand curve (AD), short-run aggregate supply…

A: The aggregate demand in the economy shows the total amount of commodities that all consumers want to…

Q: W Candidate Ho... w Candidate Ho... Fordham Univ... Inbox B Education | BL B Bloomberg for... Which…

A: Forеign еxchangе markеts, arе global financial markеts whеrе participants can buy, sеll, еxchangе,…

Q: Required information To retire at a decent age and move to Hawaii, an engineer plans to trust her…

A: The real rate of return is given as 10% per year.The inflation rate is 4% per year.The current value…

Q: What is the optimal productivity rate for a two-person carpentry crew that has a measured…

A: Productivity of input refers to the efficiency and effectiveness with which a particular resource or…

Q: I need help on D through H! Please! Suppose the reserve requirement is 8% and a new deposit of $900…

A: The central banking system of the United States is called the Federal Reserve. This is otherwise…

Q: A lower reserve ratio or reserve requirement set by the Central Bank can increase the money supply…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: 3. Consider the following version of the prisoner's dilemma: 1 2 C d C 2,1 -1,4 d 3,-3 0,0 Assume…

A: In the repeated prisoner's dilemma, a Subgame Perfect Equilibrium (SPE) involves strategies that are…

Q: If there were 10 firms in this market, the short-run equilibrium price of rhodium would be 5 would…

A: Perfect competition is a market consisting of a large number of buyers and sellers. In this market…

Q: Figure 3 shows the federal funds market. Assume that the market of reserves is in equilibrium at…

A: The federal market relates to the buying and selling of products and services by the national…

Q: The expression for the MP curve is: OA. r=2+0.75. OB. r= 3.5+ 1.5. OC. r= 3.5+ 0.75. D. r=2+1.5. The…

A: (Note: As you have asked multiple questions, I can only answer the first three sub-parts as per the…

Q: If government deposits at the Bank of Canada are predicted to increase, the Bank. settlement will…

A: The Federal Reserve System, often simply called the Fed, is the central bank of the United States.…

Q: A chemical company can produce Q units of a chemical H, with marginal costs of MC = 9 + Q, and can…

A: Marginal Cost (MC):Definition: Marginal Cost represents the additional cost incurred by producing…

Q: The graphs below illustrate the market for a product on which an excise tax has been imposed by…

A: Excise taxes are indirect taxes levied by the government on the sale of a particular good or…

Q: A nation will import a good if its no-trade, domestic: price is equal to the world price. price is…

A: Import refers to the purchase of goods and services by a nation from the rest of the world.

Q: [pizza] Italian Gator and Midtown Pizza are long-time rivals. Midtown is repricing their pizza and…

A: The weighted average price is a strategic pricing metric that considers the significance of various…

Q: Scenario 13-4 Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100.000.…

A: Implicit cost is the loss of income that is not recorded. It is similar to opportunity cost but…

Q: 6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of…

A: Since you have posted multiple questions, we will provide the solution only to the first question as…

Q: Costs ($) 800 500 450 300 I I TC TVC 0 1 2 3 4 5 6 7 8 9 10 11 12 Units of output

A: Cost curves substantially influence economic decision-making, with their shapes signaling…

Q: What is the current real GDP per person in South Africa? How has this changed over the past 10…

A: The word "economic environment" refers to any or all external economic parts that influence shopper…

Q: Suppose you earned $60,000 per year and pay taxes based on marginal tax rates. The first tax bracket…

A: To calculate the total taxes paid, we need to determine the amount of income that falls into each…

Q: The table above describes the production schedule of a camera manufacturer. The company can hire as…

A: Marginal product of worker(MPL) is the additional output that is produced by hiring an additional…

Q: The oligopoly market structure is characterized by several defining qualities on of which is either…

A: Oligopoly refers to a market structure characterized by a small number of large firms dominating the…

Q: Suppose the market for the pain reliever aspirin is in long-run equilibrium at a price of $3 per…

A: In a perfectly competitive firm, equilibrium is at the point where MC=ATC equals MR, here MR= AR=…

Q: 1. Consider a linear regression model y = XB+ewith E(e) = 0. The bias of the ridge estimator of 3…

A: Regression:Regression analysis is a statistical technique used in economics to examine the…

Q: Progressive Transfer payments Proportional Data lag Transmission lag Supply-side Cyclical Structural…

A: The objective of the question is to identify the correct term that describes the time it takes for a…

Q: - At GDP of 5000, consumption is? - At GDP of 8200, consumption is? - At GDP of 8200: 1.…

A: "As per the policy, we can provide a solution to the first question and its subparts. Kindly raise…

Q: According to the graph below answer the following questions: 1. What is the profit-maximizing…

A: In perfect competition, There exists a large number of buyers and sellers. The firm will produce…

Q: Transfer payments represent income that is not earned but received by individuals. O True O False

A: A transfer payment alludes to a payment made by a government or an association to people,…

Q: If a bank uses $100 of excess reserves to make a new loan when the reserve ratio is 25 percent, what…

A: Money supply refers to the sum of all types of money that are available and circulating in the…

Q: The federal budget can be in surplus, deficit or balance, and there can be a cyclical deficit and a…

A: A federal budget refers to the financial plan outlining the government's expected revenue and…

Q: Elegant Settings manufactures stainless steel cutlery. The table below shows the company's cost…

A: The cost data is provided below. Quantity Long Run Average Cost1004020035300304003050035

Q: is the federal government's plan for spending and tax revenues.

A: The term federal government designates the main body in charge of managing and supervising national…

Q: Consider the payoff matrix M for a non-zero-sum game between player 1 with a choice of moves d₁ and…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: Which situation is most likely to create an incentive for doctors to perform unnecessary procedures…

A: The situation most likely to create an incentive for doctors to perform unnecessary procedures is: a…

Q: Refer to Table. What is the lowest price at which this firm would operate in the short run and…

A: Total Fixed cost is independent of the level of output and it is even incurred even at zero level of…

Q: Suppose the following statistics characterize the financial health of the hypothetical economy…

A: A combination of countries' final goods and services is known as Gross domestic product. It measures…

Q: g " Assume that the company is producing 800 popsicle sticks. How many toothpicks are they…

A: Production Possibility Curve (PPC) refers to the curve that shows the maximum possible combination…

Q: The table below shows the short-run cost data of a perfectly competitive firm that produces plastic…

A: Total cost is the cost of producing all the units of good. Marginal cost is the cost of producing an…

Q: Refer to the graph that depicts Joe's family restaurant in a perfectly competitive market. The firm…

A: A perfectly competitive market is the kind of market with multiple sellers producing identical…

Q: 9yt = 9mt Tt - Ut ut-1= P(gyt - gy) πt − πt_1 = -α(ut — un) The beta in Okun's law is 0.4 The alpha…

A: Inflation refers to the sustained increase in the general price level of goods and services within…

Q: An aerodynamic three-wheeled automobile (the Dart) runs on compressed natural gas stored in two…

A: The Equivalent Uniform Annual Cost (EUAC) is a financial concept that is used to compare the costs…

Q: Consider the market shown in the figure. Compute the consumer surplus at the equilibrium price and…

A: Consumer surplus in economics is defined as the difference between highest price the consumer is…

Q: Pre-mixed concrete is an important input for the construction industry. Concrete cannot be stored or…

A: Cournot Competition is the oligopoly market situation where two or more firms produce identical…

Q: with reference to oligopoly draw a set of reaction curves that result in an unstable equilibrium

A: An oligopoly is a type of market structure where there are a small number of firms who feel that…

Q: Question 29 Inflation rate (percent per year) 10 3 LRPC₂ LRPC LAPC₁ SRPC, SRPC, SRPC, 468 10 12 14…

A: The philips curve in macreconomics is an economic model which gives us an inverse relationship…

Q: Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is…

A: The objective of the question is to understand the impact of an increase in government consumption…

Q: Watch Dan Miller’s TED talk, A Simple and Smart Way to Fix Climate Change, and address the following…

A: In a globalized marketplace, externalities such as pollution, medical expenditures, and traffic jams…

Q: 2. The graph below shows the AD-AS model in short-run equilibrium at a price level, Po, and a level…

A: The aggregate demand in the economy shows the total spending done by various sectors of the economy…

Q: Answer the questions below for the economy of Motak using the graph below. 1000 900 800 700 600 500…

A: This concept can be defined as a tool that helps in measuring the total amount of production of…

Question

please help me with this question

downstream. The mill earns $500 in profit, and the technology exists for it to build
a treatment plant at the site that completely eliminates the pollution, but at a cost of
$200. There are two possible assignments of property rights: (i) the fishery has the
right to a clean river and (ii) the mill has the right to pollute the river.
What is the efficient outcome (the maximum of total joint profit)?
b. What are the outcomes under the two different property rights regimes, when
there is no possibility of bargaining?
How does your answer to (b) change when the two firms can bargain
costlessly?
C.

2. Consider a pollution problem involving a paper mill located on a river and a com-
mercial salmon fishery operating on the same river. The fishery can operate at one
of two locations: upstream (above the mill) or downstream (in the polluted part of
the river). Pollution lowers profits for the fishery: without pollution, profits are $300
upstream and $500 downstream; with pollution, profits are $200 upstream and $100

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define property rights

VIEW

Step 2: Calculate efficient outcome

VIEW

Step 3: Calculate maximum outcomes under different scenarios

VIEW

Step 4: Calculate maximum outcomes when bargain is possible

VIEW

Solution

VIEW

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between K and L, can you say which one is better and why? In the choice between K. and N, can you say which one is better, and why? If you had to guess, which choice would you think is move likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
How can high-income countries benefit from covering much of the cost of reducing pollution created by low-income countries?
Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?
What is a pollution charge and what incentive does it provide for a firm to take external costs into account?
Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.
What is command-and-control environmental regulation?
Table 12.5 provides the supply and demand conditions for a manufacturing film. The third column represents a supply curve without accounting for the social cost of pollution. The fourth column represents the supply curve when the film is required to account for the social cost of pollution. Identify the equilibrium before the social cost of production is included and after the social cost of production is included.
What is an externality?
Suppose that Sonys R. Is this a private or social benefit?
Classify the following pollution-control policies as command-and-control or market incentive based. A state emissions tax on the quantity of carbon emitted by each firm. The federal government requires domestic auto companies to improve car emissions by 2020. The EPA sets national standards for water quality. A city sells permits to films that allow them to emit a specified quantity of pollution. The federal government pays fishermen to preserve salmon.
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?