How many tons of mashed potatoes will the Rock Mashed Potato Factory produce?.
The Rocky Mashed Potato factory produces output at costs C=Q2 (marginal cists 2Q) where Q is the qu Show more The Rocky Mashed Potato factory produces output at costs C=Q2 (marginal cists 2Q) where Q is the quantity of mashed potatoes produced in tons. In addition 2 units of emissions are produced for each ton of mashed potatoes (E=2Q). Polluting damage is $2 for each unit of emissions which leads the government to charge $2 per unit of emissions as a Pigouvian fee. The firms output selsl competitively for $10 per ton. ( at least 250 words total) a. How many tons of mashed potatoes will the Rock Mashed Potato Factory produce? How much does it pay in emission fees? What are its profits? b. A devise is invented that would reduce the firms emissions to one unit for each ton of output (E=Q). How much is the firm willing to pay for such a devise? c. How would your answer to part B change if there were no government regulation of pollution? What does this lead you to say about the relationship between government and the market for abatement equipment? Show less
How many tons of mashed potatoes will the Rock Mashed Potato Factory produce?
