1) You are given that a firm's true marginal cost curve is lower than the average/expected marginal cost curve. Graphically explain the efficiency of Cap and Trade and Emissions tax for the following two cases: 1. If the slope of Marginal cost curve is steeper than slope of Marginal benefit curve 2. If the slope of Marginal cost curve is flatter than the slope of Marginal benefit curve

3. Suppose the Canada can produce cattle or corn with a given amount of resources. Below is a graphdepicting the production possibility frontier for Canada and the marginal benefit and cost of a bushel ofcorn. Discuss the relationship between the marginal cost and marginal benefit of corn and the production ofboth corn and cattle.(a) Discuss the overallocation of resources, underallocation of resources, and optimal allocation of resources.     (b) When operating at the optimal level of corn production, what is the optimal level of cattle production? Whyis this the optimal amount (why not more or less cattle)?

The state of Colorado requires oil and gas companies who use fracking techniques to return the land to its original condition after the oil and gas extractions. Table shows the total cost and total benefits (in dollars) of this policy. a. Calculate the marginal cost and the marginal benefit at each quantity (acre) of land restored. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs and benefits. b. If we apply marginal analysis, what is the optimal amount of land to be restored?

25. Suppose that there is a large farm and a large recreation firm located on a river. The farm is upstream of the recreational area. The farm uses the streamflow for irrigation. Let S be the amount of streamflow used by the farm and suppose its marginal benefit for irrigation is given by MB-5000-15S. Use of streamflow by the farm is costly to the recreational firm, though, because of lost opportunities for boating, fishing, and camping. Suppose this marginal cost is given by MC=5s. (a) Draw a sketch of the MB and MC curves for use of S by the farm. On your graph, show the efficient level of S by the farm. Solve for this amount from the equations. (b) If unregulated, the farm uses streamflow at a price of zero. Show on your graph what S this corresponds to. Solve for it from the equations. (c) If the government sets a tax price on streamflow, what tax price per unit of S will result in the farm using the efficient level of streamflow? Show on your graph and find with the equations. (d)…

3. The EPA wants to reduce emissions of sulfur dioxides from electric power-generating plants by 20 percent during the next year. To achieve this goal, the EPA will require each power-generating plant in the nation to reduce emissions by 100 tons per year. Suppose five power plants emit sulfur dioxides and serve a given metropolitan area. The following table shows the cost per ton of reducing emissions for each of the five plants: COST PER TON OF PLANT 1 2 3 4 5 EMISSIONS REDUCTION ($) a. Cost of meeting EPA regulations. 600 500 500 400 200 Assuming that the cost per ton of emissions reduction is constant and that the improvement in the air for the metropolitan area is the same no matter which plant reduces emissions, calculate the following: b. Least-cost method of achieving the EPA goal of reducing emissions of sulfur dioxides from power plants in the metropolitan area.

6. Are the following statements true or false? Explain a. If the government prices public transport so that it breaks even, then the net benefit of a cost benefit analysis must be zero. b. C. The equi-marginal principle will ensure that the reduction in emissions will be the same for each firm that is subject to regulation.

4. Assume that we have the following information about a firm that conducts scientific research: The total cost of producing q units of research is 1.5q^2. The firm believes that when it produces q units of research, it receives a benefit of 120q-q^2. The total external benefit to society of each unit of the firm's research is valued at q^2 (not including the benefit the firm receives). (a) Draw a graph that shows the marginal private cost, marginal private benefit, marginal social cost and marginal social benefit generated by this firm. How many units of research will the firm produce if there is no outside interference? (b) What is the socially optimal amount of research? (c) Suggest a tax or subsidy that would induce the firm to produce the socially optimal amount of research, then show that this tax does indeed cause the firm to produce the socially optimal amount of research.

Economics 1. Social Benefit and Social Cost For the following statements: (1) identify if there is an externality or not; If yes, (2) classify them as: positive or negative; (3) If the externality happens during the consumption or production of the good; and, finally, (4) draw a graph with the marginal private and social benefit and the marginal private and social cost. (a) Driving a non-electric-car generates carbon dioxide emissions. (b) Getting a good education improves your productivity. (c) Developing open-source software makes new tools available for developers. (d) A Youtuber makes loud noises in the middle of the night while recording videos. (e) A person is blasting music on the subway.

3. Which of the following conditions holds in an economically efficient competitive market equilibrium?  Select one: a. The marginal benefit of the last unit produced and consumed is maximized. b. The deadweight loss is positive but at a minimum. c. Producer and consumer surplus are exactly equal in size. d. There are no positive and no negative external effects from consumption and production.

Say that you are a manager with the Transportation Security Administration (TSA). The table below shows fictional estimates of the marginal benefit and marginal cost of additional TSA security lines at Mahlon Sweet Field, the airport in Eugene, Oregon. Number of Marginal In this space, draw the graph of the marginal data from the left columns. Answer these questions below using the data table and graph. Benefit 3. Security Lines 1 2 3 4 5 6 $10,000 9,000 7,000 5,000 4,000 3,000 Marginal Cost $2,000 3,000 4,000 5,000 8,000 12,000 The surplus of the marginal benefit over cost for the second security line is $ and $ for the third security line. If your goal is to maximize total surplus, you WILL / WILL NOT (circle one) operate a third security line. The optimal number of TSA security lines is because this is where the marginal equals the marginal which maximizes total