Question

(Environmental Policy) There are two firms whose production generates wastewater. One unit of production Q generates one unit of wastewater E. Firm 1's marginal revenue from production is:  MR₁ = 10 - Q₁; firm 2's marginal revenue from production is MR₂ = 18 - Q₂. The pollutants in the wastewater can be removed through the water treatment facilities. The two firms have different water treatment technologies. Firm 1's marginal treatment cost is: MTC₁ = T₁; firm 2's marginal treatment cost is MTC₂ = 2 T₂.

If the society tolerates zero pollution, what is the efficient amount of production in the society?

Group of answer choices

12

11

28

14

Following PREVIOUS QUESTION, consider the two firms operate in an efficient way. What is the total waste water treatment if each firm is required to take responsibility for its own wastewater?

Group of answer choices

11

12

14

28

(Indifference curve) An NBA player receives 40 million as his annual salary and now he is considering to donate part of his salary this year to an environmental protection fund. The player's marginal utility from personal consumption and environmental protection both decrease with the money spent. As his financial advisor, you know that he is indifferent between (10 million personal consumption, 30 million donation) and (30 million personal consumption, 10 million donation). Which of the following suggestions will you give to your client?

Group of answer choices

20 million personal consumption and 20 million donation

40 million donation

40 million personal consumption

10 million personal consumption and 30 million donation

Answer 1

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