Problem 4 [5] : A chemical factory produces a product that is sold at 10/- per ton (1 ton = 1000kg). The cost of production is ????????(????) = 0.5???? where

Problem 4 [5] : A chemical factory produces a product that is sold at 10/- per ton (1 ton = 1000kg). The cost of production is ????????(????) = 0.5???? where ???? is the number of tons of production. For every ton of production, the factory produces 1 kg of a pollutant that is either dispersed into the atmosphere at no cost to the firm or stored away at a cost of 2/- for each kg of pollutant. Let ???? denote the amount of pollutant that is dispersed in the atmosphere. The pollution causes the nearby textile firm (producing output m) to have to wash its products twice with an additional cost of ???? ???? = 0.5???? which does not depend on the amount of output ???? produced. The unit price of the output of the textile firm is 5/- and the cost of production is ???? ???? (????) = 0.02???? . a. Determine the values of ????, ????,???? in the competitive equilibrium. [b. is the socially optimal level of ????? c. is level of ???? if the externality is internalized.

Do you need us to help you on this or any other assignment?


Make an Order Now
0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.