ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 100P
To determine
Which of the alternatives is preferable.
Expert Solution & Answer
Answer to Problem 100P
The option to be selected is Solar Collector Field, since it results in a higher overall
Explanation of Solution
Given information:
Installation Cost:
Flat Solar Panels$87 Million
Mechanized Solar Panels $101 Million
Solar Collector Field $91 Million
Annual Operation and Maintenance costs (year 1):
Flat Solar Panels $2 Million
Mechanized Solar Panels $2.3 Million
Solar Collector Field $3 Million
Increase in Annual Operation and Maintenance costs (year 2 onwards):
Flat Solar Panels $250,000
Mechanized Solar Panels $300,000
Solar Collector Field $350,000
Annual Revenues in the form of Electricity
Flat Solar Panels $6.9 Million
Mechanized Solar Panels $8.8 Million
Solar Collector Field $9.7 Million
Annual Increase in Revenues:
Flat Solar Panels8%
Mechanized Solar Panels 8%
Solar Collector Field 8%
Useful Life: 20 Years
Rate of Interest for calculation: 10%.
Based on the above information, the following tables outlines the
Flat Solar Panels:
| Year | Cash Flows | Cash Inflows | Cash Flows | Net Cash Flows | P.V. @10% | Amount | |
| 0 | Electricity Benefits | $ - | Initial Cost | $ 87,000,000.00 | $ (87,000,000.00) | 1 | $ (87,000,000.00) |
| 1 | Electricity Benefits | $6,900,000.00 | Operating Costs | $ 2,000,000.00 | $ 4,900,000.00 | 0.9091 | $ 4,454,590.00 |
| 2 | Electricity Benefits (8% higher than last year) | $7,452,000.00 | Operating Costs($250,000 higher than previous year) | $ 2,250,000.00 | $ 5,202,000.00 | 0.8264 | $ 4,298,932.80 |
| 3 | Electricity Benefits (8% higher than last year) | $8,048,160.00 | Operating Costs($250,000 higher than previous year) | $ 2,500,000.00 | $ 5,548,160.00 | 0.7513 | $ 4,168,332.61 |
| 4 | Electricity Benefits (8% higher than last year) | $8,692,012.80 | Operating Costs($250,000 higher than previous year) | $ 2,750,000.00 | $ 5,942,012.80 | 0.683 | $ 4,058,394.74 |
| 5 | Electricity Benefits (8% higher than last year) | $9,387,373.82 | Operating Costs($250,000 higher than previous year) | $ 3,000,000.00 | $ 6,387,373.82 | 0.6209 | $ 3,965,920.41 |
| 6 | Electricity Benefits (8% higher than last year) | $ 10,138,363.73 | Operating Costs($250,000 higher than previous year) | $ 3,250,000.00 | $ 6,888,363.73 | 0.5645 | $ 3,888,481.33 |
| 7 | Electricity Benefits (8% higher than last year) | $ 10,949,432.83 | Operating Costs($250,000 higher than previous year) | $ 3,500,000.00 | $ 7,449,432.83 | 0.5132 | $ 3,823,048.93 |
| 8 | Electricity Benefits (8% higher than last year) | $ 11,825,387.45 | Operating Costs($250,000 higher than previous year) | $ 3,750,000.00 | $ 8,075,387.45 | 0.4665 | $ 3,767,168.25 |
| 9 | Electricity Benefits (8% higher than last year) | $ 12,771,418.45 | Operating Costs($250,000 higher than previous year) | $ 4,000,000.00 | $ 8,771,418.45 | 0.4241 | $ 3,719,958.57 |
| 10 | Electricity Benefits (8% higher than last year) | $ 13,793,131.93 | Operating Costs($250,000 higher than previous year) | $ 4,250,000.00 | $ 9,543,131.93 | 0.3855 | $ 3,678,877.36 |
| 11 | Electricity Benefits (8% higher than last year) | $ 14,896,582.48 | Operating Costs($250,000 higher than previous year) | $ 4,500,000.00 | $ 10,396,582.48 | 0.3505 | $ 3,644,002.16 |
| 12 | Electricity Benefits (8% higher than last year) | $ 16,088,309.08 | Operating Costs($250,000 higher than previous year) | $ 4,750,000.00 | $ 11,338,309.08 | 0.3186 | $ 3,612,385.27 |
| 13 | Electricity Benefits (8% higher than last year) | $ 17,375,373.81 | Operating Costs($250,000 higher than previous year) | $ 5,000,000.00 | $ 12,375,373.81 | 0.2897 | $ 3,585,145.79 |
| 14 | Electricity Benefits (8% higher than last year) | $ 18,765,403.71 | Operating Costs($250,000 higher than previous year) | $ 5,250,000.00 | $ 13,515,403.71 | 0.2633 | $ 3,558,605.80 |
| 15 | Electricity Benefits (8% higher than last year) | $ 20,266,636.01 | Operating Costs($250,000 higher than previous year) | $ 5,500,000.00 | $ 14,766,636.01 | 0.2394 | $ 3,535,132.66 |
| 16 | Electricity Benefits (8% higher than last year) | $ 21,887,966.89 | Operating Costs($250,000 higher than previous year) | $ 5,750,000.00 | $ 16,137,966.89 | 0.2176 | $ 3,511,621.59 |
| 17 | Electricity Benefits (8% higher than last year) | $ 23,639,004.24 | Operating Costs($250,000 higher than previous year) | $ 6,000,000.00 | $ 17,639,004.24 | 0.1978 | $ 3,488,995.04 |
| 18 | Electricity Benefits (8% higher than last year) | $ 25,530,124.58 | Operating Costs($250,000 higher than previous year) | $ 6,250,000.00 | $ 19,280,124.58 | 0.1799 | $ 3,468,494.41 |
| 19 | Electricity Benefits (8% higher than last year) | $ 27,572,534.54 | Operating Costs($250,000 higher than previous year) | $ 6,500,000.00 | $ 21,072,534.54 | 0.1635 | $ 3,445,359.40 |
| 20 | Electricity Benefits (8% higher than last year) | $ 29,778,337.31 | Operating Costs($250,000 higher than previous year) | $ 6,750,000.00 | $ 23,028,337.31 | 0.1486 | $ 3,422,010.92 |
| Net Present Value | $ (11,904,541.97) |
Mechanized Solar Panels:
| Year | Cash Flows | Cash Inflows | Cash Flows | Cash Outflows | Net Cash Flows | P.V. @10% | Amount |
| 0 | Electricity Benefits | $ - | Initial Cost | $ 101,000,000.00 | $ (101,000,000.00) | 1 | $ (101,000,000.00) |
| 1 | Electricity Benefits (8% higher than last year) | $ 8,800,000.00 | Operating Costs | $ 2,300,000.00 | $ 6,500,000.00 | 0.9091 | $ 5,909,150.00 |
| 2 | Electricity Benefits (8% higher than last year) | $ 9,504,000.00 | Operating Costs($300,000 higher than previous year) | $ 2,600,000.00 | $ 6,904,000.00 | 0.8264 | $ 5,705,465.60 |
| 3 | Electricity Benefits (8% higher than last year) | $ 10,264,320.00 | Operating Costs($300,000 higher than previous year) | $ 2,900,000.00 | $ 7,364,320.00 | 0.7513 | $ 5,532,813.62 |
| 4 | Electricity Benefits (8% higher than last year) | $ 11,085,465.60 | Operating Costs($300,000 higher than previous year) | $ 3,200,000.00 | $ 7,885,465.60 | 0.683 | $ 5,385,773.00 |
| 5 | Electricity Benefits (8% higher than last year) | $ 11,972,302.85 | Operating Costs($300,000 higher than previous year) | $ 3,500,000.00 | $ 8,472,302.85 | 0.6209 | $ 5,260,452.84 |
| 6 | Electricity Benefits (8% higher than last year) | $ 12,930,087.08 | Operating Costs($300,000 higher than previous year) | $ 3,800,000.00 | $ 9,130,087.08 | 0.5645 | $ 5,153,934.15 |
| 7 | Electricity Benefits (8% higher than last year) | $ 13,964,494.04 | Operating Costs($300,000 higher than previous year) | $ 4,100,000.00 | $ 9,864,494.04 | 0.5132 | $ 5,062,458.34 |
| 8 | Electricity Benefits (8% higher than last year) | $ 15,081,653.57 | Operating Costs($300,000 higher than previous year) | $ 4,400,000.00 | $ 10,681,653.57 | 0.4665 | $ 4,982,991.39 |
| 9 | Electricity Benefits (8% higher than last year) | $ 16,288,185.85 | Operating Costs($300,000 higher than previous year) | $ 4,700,000.00 | $ 11,588,185.85 | 0.4241 | $ 4,914,549.62 |
| 10 | Electricity Benefits (8% higher than last year) | $ 17,591,240.72 | Operating Costs($300,000 higher than previous year) | $ 5,000,000.00 | $ 12,591,240.72 | 0.3855 | $ 4,853,923.30 |
| 11 | Electricity Benefits (8% higher than last year) | $ 18,998,539.98 | Operating Costs($300,000 higher than previous year) | $ 5,300,000.00 | $ 13,698,539.98 | 0.3505 | $ 4,801,338.26 |
| 12 | Electricity Benefits (8% higher than last year) | $ 20,518,423.17 | Operating Costs($300,000 higher than previous year) | $ 5,600,000.00 | $ 14,918,423.17 | 0.3186 | $ 4,753,009.62 |
| 13 | Electricity Benefits (8% higher than last year) | $ 22,159,897.03 | Operating Costs($300,000 higher than previous year) | $ 5,900,000.00 | $ 16,259,897.03 | 0.2897 | $ 4,710,492.17 |
| 14 | Electricity Benefits (8% higher than last year) | $ 23,932,688.79 | Operating Costs($300,000 higher than previous year) | $ 6,200,000.00 | $ 17,732,688.79 | 0.2633 | $ 4,669,016.96 |
| 15 | Electricity Benefits (8% higher than last year) | $ 25,847,303.89 | Operating Costs($300,000 higher than previous year) | $ 6,500,000.00 | $ 19,347,303.89 | 0.2394 | $ 4,631,744.55 |
| 16 | Electricity Benefits (8% higher than last year) | $ 27,915,088.20 | Operating Costs($300,000 higher than previous year) | $ 6,800,000.00 | $ 21,115,088.20 | 0.2176 | $ 4,594,643.19 |
| 17 | Electricity Benefits (8% higher than last year) | $ 30,148,295.26 | Operating Costs($300,000 higher than previous year) | $ 7,100,000.00 | $ 23,048,295.26 | 0.1978 | $ 4,558,952.80 |
| 18 | Electricity Benefits (8% higher than last year) | $ 32,560,158.88 | Operating Costs($300,000 higher than previous year) | $ 7,400,000.00 | $ 25,160,158.88 | 0.1799 | $ 4,526,312.58 |
| 19 | Electricity Benefits (8% higher than last year) | $ 35,164,971.59 | Operating Costs($300,000 higher than previous year) | $ 7,700,000.00 | $ 27,464,971.59 | 0.1635 | $ 4,490,522.86 |
| 20 | Electricity Benefits (8% higher than last year) | $ 37,978,169.32 | Operating Costs($300,000 higher than previous year) | $ 8,000,000.00 | $ 29,978,169.32 | 0.1486 | $ 4,454,755.96 |
| Net Present Value | $ (2,047,699.18) |
Solar Collector Field:
| Year | Cash Flows | Cash Inflows | Cash Flows | Cash Outflows | Net Cash Flows | P.V. @10% | Amount |
| 0 | Electricity Benefits | $ - | Initial Cost | $ 91,000,000.00 | $ (91,000,000.00) | 1 | $ (91,000,000.00) |
| 1 | Electricity Benefits (8% higher than last year) | $ 9,700,000.00 | Operating Costs | $ 3,000,000.00 | $ 6,700,000.00 | 0.9091 | $ 6,090,970.00 |
| 2 | Electricity Benefits (8% higher than last year) | $ 10,476,000.00 | Operating Costs($350,000 higher than previous year) | $ 3,350,000.00 | $ 7,126,000.00 | 0.8264 | $ 5,888,926.40 |
| 3 | Electricity Benefits (8% higher than last year) | $ 11,314,080.00 | Operating Costs($350,000 higher than previous year) | $ 3,700,000.00 | $ 7,614,080.00 | 0.7513 | $ 5,720,458.30 |
| 4 | Electricity Benefits (8% higher than last year) | $ 12,219,206.40 | Operating Costs($350,000 higher than previous year) | $ 4,050,000.00 | $ 8,169,206.40 | 0.683 | $ 5,579,567.97 |
| 5 | Electricity Benefits (8% higher than last year) | $ 13,196,742.91 | Operating Costs($350,000 higher than previous year) | $ 4,400,000.00 | $ 8,796,742.91 | 0.6209 | $ 5,461,897.67 |
| 6 | Electricity Benefits (8% higher than last year) | $ 14,252,482.34 | Operating Costs($350,000 higher than previous year) | $ 4,750,000.00 | $ 9,502,482.34 | 0.5645 | $ 5,364,151.28 |
| 7 | Electricity Benefits (8% higher than last year) | $ 15,392,680.93 | Operating Costs($350,000 higher than previous year) | $ 5,100,000.00 | $ 10,292,680.93 | 0.5132 | $ 5,282,203.85 |
| 8 | Electricity Benefits (8% higher than last year) | $ 16,624,095.41 | Operating Costs($350,000 higher than previous year) | $ 5,450,000.00 | $ 11,174,095.41 | 0.4665 | $ 5,212,715.51 |
| 9 | Electricity Benefits (8% higher than last year) | $ 17,954,023.04 | Operating Costs($350,000 higher than previous year) | $ 5,800,000.00 | $ 12,154,023.04 | 0.4241 | $ 5,154,521.17 |
| 10 | Electricity Benefits (8% higher than last year) | $ 19,390,344.88 | Operating Costs($350,000 higher than previous year) | $ 6,150,000.00 | $ 13,240,344.88 | 0.3855 | $ 5,104,152.95 |
| 11 | Electricity Benefits (8% higher than last year) | $ 20,941,572.47 | Operating Costs($350,000 higher than previous year) | $ 6,500,000.00 | $ 14,441,572.47 | 0.3505 | $ 5,061,771.15 |
| 12 | Electricity Benefits (8% higher than last year) | $ 22,616,898.27 | Operating Costs($350,000 higher than previous year) | $ 6,850,000.00 | $ 15,766,898.27 | 0.3186 | $ 5,023,333.79 |
| 13 | Electricity Benefits (8% higher than last year) | $ 24,426,250.13 | Operating Costs($350,000 higher than previous year) | $ 7,200,000.00 | $ 17,226,250.13 | 0.2897 | $ 4,990,444.66 |
| 14 | Electricity Benefits (8% higher than last year) | $ 26,380,350.14 | Operating Costs($350,000 higher than previous year) | $ 7,550,000.00 | $ 18,830,350.14 | 0.2633 | $ 4,958,031.19 |
| 15 | Electricity Benefits (8% higher than last year) | $ 28,490,778.16 | Operating Costs($350,000 higher than previous year) | $ 7,900,000.00 | $ 20,590,778.16 | 0.2394 | $ 4,929,432.29 |
| 16 | Electricity Benefits (8% higher than last year) | $ 30,770,040.41 | Operating Costs($350,000 higher than previous year) | $ 8,250,000.00 | $ 22,520,040.41 | 0.2176 | $ 4,900,360.79 |
| 17 | Electricity Benefits (8% higher than last year) | $ 33,231,643.64 | Operating Costs($350,000 higher than previous year) | $ 8,600,000.00 | $ 24,631,643.64 | 0.1978 | $ 4,872,139.11 |
| 18 | Electricity Benefits (8% higher than last year) | $ 35,890,175.13 | Operating Costs($350,000 higher than previous year) | $ 8,950,000.00 | $ 26,940,175.13 | 0.1799 | $ 4,846,537.51 |
| 19 | Electricity Benefits (8% higher than last year) | $ 38,761,389.14 | Operating Costs($350,000 higher than previous year) | $ 9,300,000.00 | $ 29,461,389.14 | 0.1635 | $ 4,816,937.12 |
| 20 | Electricity Benefits (8% higher than last year) | $ 41,862,300.27 | Operating Costs($350,000 higher than previous year) | $ 9,650,000.00 | $ 32,212,300.27 | 0.1486 | $ 4,786,747.82 |
| Net Present Value | $ 13,045,300.56 |
Net present value is the difference of Sum of Present values of cash inflows and Sum of Present values of cash outflows. If the value is positive then the project may be accepted. While evaluation of two or more alternatives takes place, then the proposal with the higher net present value may be selected since it results in a greater cash inflow over the duration of the project.
In the given scenario, Present values are calculated by calculating the present values of cash inflows in the form of revenues in the form of electricity and cash outflows such as installation cost and operating cost.
Installation Costs in case of Flat Solar Panels are $87 Million, Mechanized Solar Panels + $101 Million and Solar Collector Field + $91 Million.
Annual Operation and Maintenance costs for year 1, in case of Flat Solar Panels+ $2 Million, Mechanized Solar Panels + $2.3 Million and Solar Collector Field + $3 Million.
Increase Annual Operation and Maintenance costs year 2 onwardsin case ofFlat Solar Panels+ $250,000, Mechanized Solar Panels + $300,000 and Solar Collector Field + $350,000.
Annual Revenues in the form of Electricity in case of Flat Solar Panels + $6.9Million, Mechanized Solar Panels + $8.8 Million and Solar Collector Field + $9.7 Million
Annual Increase in Revenues is 8% in case of all alternatives and the Useful Life is 20 Years. Rate of Interest for calculation is considered as 10%
Present value factor is calculated as 1/1.10 ^ N where N is the year of operation.
Conclusion:
Hence the option to be selected is Flat Solar Panels since it results in higher overall cash flow for a period of 20 years.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
The answer is not C
Social capital includes:
a) labour, produced capital, and natural capital.
b) human capital, physical capital, and natural resources.
c) labour, physical capital, and human capital.
d) labour, physical capital, and produced capital.
General Accounting Question solution and give me Blank ? C
Chapter 5 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 5 - Prob. 1QTCCh. 5 - Prob. 2QTCCh. 5 - Prob. 3QTCCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7P
Ch. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - Prob. 46PCh. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - Prob. 60PCh. 5 - Prob. 61PCh. 5 - Prob. 62PCh. 5 - Prob. 63PCh. 5 - Prob. 64PCh. 5 - Prob. 65PCh. 5 - Prob. 66PCh. 5 - Prob. 67PCh. 5 - Prob. 68PCh. 5 - Prob. 69PCh. 5 - Prob. 70PCh. 5 - Prob. 71PCh. 5 - Prob. 72PCh. 5 - Prob. 73PCh. 5 - Prob. 74PCh. 5 - Prob. 75PCh. 5 - Prob. 76PCh. 5 - Prob. 77PCh. 5 - Prob. 78PCh. 5 - Prob. 79PCh. 5 - Prob. 80PCh. 5 - Prob. 81PCh. 5 - Prob. 82PCh. 5 - Prob. 83PCh. 5 - Prob. 84PCh. 5 - Prob. 85PCh. 5 - Prob. 86PCh. 5 - Prob. 87PCh. 5 - Prob. 88PCh. 5 - Prob. 89PCh. 5 - Prob. 90PCh. 5 - Prob. 91PCh. 5 - Prob. 92PCh. 5 - Prob. 93PCh. 5 - Prob. 94PCh. 5 - Prob. 95PCh. 5 - Prob. 96PCh. 5 - Prob. 97PCh. 5 - Prob. 98PCh. 5 - Prob. 99PCh. 5 - Prob. 100PCh. 5 - Prob. 101P
Knowledge Booster
Similar questions
- It is possible to use transformational leadership strategies to reach unethical objectives. Traditional leadership theories and morals standards are not adequate to help employees solve complex organizational issues. For the statement above, argue in position for both in favor or opposed to the statements.arrow_forwardDiscuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.arrow_forwardanswerarrow_forward
- Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.arrow_forwardNot use ai pleasearrow_forwardFor the statement below, argue in position for both in favor or opposed to the statement. Incompetent leaders can't be ethical leaders. Traditional leadership theories and moral standards are not adequate to help employees solve complex organizational issues.arrow_forward
- presentation on "Dandelion Insomnia." Poemarrow_forwardDon't used Ai solutionarrow_forward"Whether the regulator sells or gives away tradeable emission permits free of charge, the quantities of emissions produced by firms are the same." Assume that there are n identical profit-maximising firms where profit for each firm is given by π(e) with л'(e) > 0; π"(e) < 0 and e denotes emissions. Individual emissions summed over all firms gives E which generates environmental damages D(E). Show that the regulator achieves the optimal level of total pollution through a tradeable emission permit scheme, where the permits are distributed according to the following cases: Case (i) the firm purchases all permits; Case (ii) the firm receives all permits free; and Page 3 of 5 ES30031 Case (iii) the firm purchases a portion of its permits and receives the remainder free of charge.arrow_forward
- compare and/or contrast the two plays we've been reading, Antigone and A Doll's House.arrow_forwardPlease answer step by steparrow_forwardSuppose there are two firms 1 and 2, whose abatement costs are given by c₁ (e₁) and C2 (е2), where e denotes emissions and subscripts denote the firm. We assume that c{(e) 0 for i = 1,2 and for any level of emission e we have c₁'(e) # c₂' (e). Furthermore, assume the two firms make different contributions towards pollution concentration in a nearby river captured by the transfer coefficients ε₁ and 2 such that for any level of emission e we have C₂'(e) # The regulator does not know the resulting C₁'(e) Τι environmental damages. Using an analytical approach explain carefully how the regulator may limit the concentration of pollution using (i) a Pigouvian tax scheme and (ii) uniform emissions standards. Discuss the cost-effectiveness of both approaches to control pollution.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education