QUESTION 6 Carl and Don run separate chemical fertilizer manufacturing companies in the same industrial park. Both pollute the river owing through the industrial park with debris and waste from their manufacturing processes. In the table below. the first row shows the current level of debris and waste each produces that makes its way into the river. The information in the table also indicates how much it would cost each manufacturer to reduce its pollution by additional increments of 'IU pounds. Current debris in pounds Cost of reducing debris by \"ID pounds Cost of reducing debris by a second 10 pounds Cost of reducing debris by a third \"IO pounds Cost of reducing debris by a fourth \"IO pounds Cost of reducing debris by a fifth '10 pounds 525 $10 If the government imposes a pollution tax of $7 for each 10 pounds of debris, total pollution will fall by _ pounds, at a total cost of O 40; $28 (I) 40; $1? (3 40; $22 (3 60; $30 QUESTION 7 A country is currently creating 40 million tons of toxic waste per year. The table below shows the marginal costs and benefits of reducing the amount of toxic waste to various amounts. Total Cost (in Total Benefits (in Marginal Marginal Benefit | Total Benefit Minus Total Cost thousands of dollars) thousands of dollars) Cost 40 million tons Current situation Current situation 30 million tons 50 800 50 800 Gain of 750 20 million tons 150 X 100 700 Gain of 1,350 10 million tons 500 1,850 350 350 Gain of 1,350 0 tons 1,200 2,000 700 150 Gain of 800 What number belongs in place of X? O 700 O 900 O 1300 O 1500QUESTIONS Four companies, Alpha, Beta, Gamma and Delta, are burning coal to proche electricity. As a result, they also produce emissions. In the table below; the first row of shows the total pounds of emissions currently produced by each firm. The other rows of the table show the cost for each firm of reducing emissions by the first 50 tons, the second 50 tons, and so on. Alpha Beta Gamma Delta Current production of emissions in tons 150 Cost of reducing emissions by first 50 tons $20 Cost of reducing emissions by second 50 tons $25 Cost of reducing emissions by third 50 tons $30 Cost of reducing emissions by fourth 50 tons [no emissions left) Cost of reducing emissions by fifth 50 tons [no emissions left) The total cost of requiring each firm to reduce its garbage by one third is O 8167 O 5137 O 5187 O 5127 QUESTION 9 Two logging companies are deciding whether or not to cut down a significant portion of a particular forest that both have access too. Both companies understand the environmental consequences of their actions, knowing that they are trading off higher profits for a better outcome from society's point of view. The payoffs facing these companies are given in the table below. Company 2 Cut Do Not Cut Cut 1 loses 10 1 gains 30 Company 1 2 loses 10 2 loses 20 Do Not Cut 1 loses 20 1 gains 20 2 gains 30 2 gains 20 From the table, we know that if Company 2 chooses to cut, Company 1 will choose to the forest. If Company 2 chooses to not cut, Company 1 will choose to the forest. O cut, do not cut O cut, cut O do not cut, do not cut O do not cut, cutQUESTION 10 The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic slucge in a nearby river is given in the table below. Price Quantity Quantity Supplied Quantity Supplied Demanded without Paying after Paying Social Social Costs Costs 100 0 \"I20 ?5 80 10 'lUU 50 55 30 4D 55 30 80 20 100 The equilibrium price and quantity when only private costs are taken into account are C) Price = 555: Quantity 2 30 C) Price 2 S40: Quantity 2 55 c: Price = 530: Quantity = 20 C) Price = 530: Quantity = 80 QUESTION 16 A drug company is deciding how much to invest in Research and Development into finding a cure for stomach cancer. The table below shows the company's demand for financial capital for R&D of this drug, based on its expected rates of return from selling the drug. Every investment has an additional 4% social return: that is, an investment that pays at least a 5% return to the drug company will create at least a 9% return for society as a whole. Estimated Rate of Return Value of R&D Projects That Provide at Least This High a Private Rate of Return to the Drug Company (measured in millions of dollars) 10% $220 9% $228 8% $238 7% $250 6% $264 5% $280 4% $298 3% $308If the opportunity cost of financial capital for the drug company falls from 7% to 5%, the drug company will invest more in R&D if it receives only the private benefits of this investment. O $14 O $16 O $24 O $30QUESTION 17 ToasterOvenslnc. is developing technology to make a toaster oven than uses less electricity. If successful, the technology will significantly reduce the amount of energy that is wasted due to product inefficiencies. If the firm sells only in response to the market price, the quantity shown in the third column of the table below is supplied. lfthe firm were also to receive the broader social benefits of the new technology, the willingness to supply is shown in the fourth column. Price Quantity Demanded Quantity Supplied Quantity Supplied If Firm Also Receives Social Benefits 15 710 16 740 17 770 18 800 19 830 20 500 700 860 If the firm were to receive a price based only on private benefits, the equilibrium price and quantity would be C} 516.740 C3 617 680 C3 618 620 C3 619 660 QUESTION 26 A group of 10 golfing buddies have the following annual incomes: $32,000, $12,000, $56,000, $120,000, $10,000, $38,000, $70,000, $16,000, $20,000, $24,000. The share of income received by the bottom quintile of this income distribution is O 3.5% O 5.5% O 7.5% O 9.5%