ECN 511 Quiz: Ch 9-12 PP Final Exam Prep

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All firms in the following questions are cost-minimizers. Consider a cc and a fishery operating on a river. Pv safety costs: 1b$ if low (l) with prob 3% of accident ; 2b$ if high (h) with prob 1% of accident. Describe the social preferences ranking of the 3 options: l, h, Show graphically how each firm, and how the economy in general is affected (the math is dirty so just use a graphical explanation). So if the firm embarks on r&d, then they will discover macn, and the govt will change the standards to e=20 (not the se level). Then what is the tsc no : assume under low enforcement, the firm operates at e=15. What is the tsclow: assume under high enforcement, the firm operates at the se level. Mach=5000-25e: the govt. wants e=280 in total. Part i: 2250, 5850, 30, 4050, 50, 150, 3600, 78, 896.

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