Question 1 (10 marks): Suppose country A and country B are deciding whether to install new...

Question 1 :

Suppose country A and country B are deciding whether to install new incinerator to reduce regional air pollution or not. The new incinerators can reduce the domestic pollution and the cross-border pollution that affects both countries.

To quantify the analysis, suppose that if country A installs the new incinerator, it generates benefit of $1 million from reducing domestic pollution and of $1 million from reducing cross-border pollution. But, the benefit from reducing cross-border pollution will be equally shared by two countries. So, country A and country B will get a benefit of $0.5 million from reducing cross border pollution if country A installs the new incinerator.

The same calculation applies to country B. In other words, the new incinerator generates $1 million benefits domestically in B, and $1 million shared benefits to both A and B (each country gets $0.5 million)

a) Suppose that there is no cost in installing the new incinerator. Draw the game matrix and determine the equilibrium.

b) Suppose that the cost of installing the new incinerator is $2 million, draw the game matrix again. What is the implication from the equilibrium?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

1. A group of doctors is deciding whether or not to perform an operation. Suppose the...

1. A group of doctors is deciding whether or not to perform an operation. Suppose the null hypothesis, H0, is: the surgical procedure will go well. State the Type I and Type II errors in complete sentences, and explain which is the error with the greater consequence and why. 2. An article posted on your college's website claims that 12% of the students at the school use marijuana. You randomly sample 140 students, and 12 students reply that they do...

Suppose that the pharmaceutical rm Merck is deciding whether to develop a new diagnostic procedure that...

Suppose that the pharmaceutical rm Merck is deciding whether to develop a new diagnostic procedure that can detect early-stage Alzheimer's disease more accurately than existing tests. Developing this technology would require an up-front fixed cost FC > 0. If Merck develops the technology, it can screen Q patients for Alzheimer's at the variable cost VC(Q) = 20Q. Merck estimates that market demand for the procedure would be p(Q) = 80 - (1/10)Q a. Suppose that other companies can quickly copy...

Suppose Firms A and B sell competing products and are deciding whether to undertake advertising campaigns....

Suppose Firms A and B sell competing products and are deciding whether to undertake advertising campaigns. Each firm will be affected by its competitor’s decision. Table 13.1 provides the pay-off matrix: table 13.1 firm B-advertise firm B - don't advertise firm A-advertise 10, 5 15, 0 firm A - don't advertise 6, 8 10, 2 A Please transform this game in normal form into a game in extensive Form, and then try to find the equilibrium. Assume that firm A...

Suppose country A has a GDP of $10 billion and country B has a GDP of...

Suppose country A has a GDP of $10 billion and country B has a GDP of $2 billion. If we assume that there are only two countries A and B in the world and that the coefficient of B can be approximated by the inverse of the world GDP, approximately what volume of trade is predicted to occur between the two countries if they are both 500 miles apart and our uncertainty parameter is given by 1.5. Suppose instead that...

QUESTION 1 (10 Marks- 5 each)- This question contains two sub questions a and b. Describe...

QUESTION 1 (10 Marks- 5 each)- This question contains two sub questions a and b. Describe five requirements of the COBIT framework. Compare the followings in terms of capacity, expenses, processing power, size and users they support: Supercomputers Mainframe Computers Comparison Element Supercomputers Mainframe Computers

QUESTION 4 Regression Analysis Guide to marks: 20 marks – 5 for a, 10 for b,...

QUESTION 4 Regression Analysis Guide to marks: 20 marks – 5 for a, 10 for b, 3 for c, 2 for d Belinda, the accountant at Murray Manufacturing Company wants to identify cost drivers for support overhead costs. She has the impression that the staff spend a large part of their time ensuring that the equipment is correctly set up and checking the first units of production in each batch. Deborah has collected the following data for the past 12...

QUESTION 3 Regression Analysis Guide to marks: 20 marks – 5 for a, 10 for b,...

QUESTION 3 Regression Analysis Guide to marks: 20 marks – 5 for a, 10 for b, 3 for c, 2 for d Belinda, the accountant at Murray Manufacturing Company wants to identify cost drivers for support overhead costs. She has the impression that the staff spend a large part of their time ensuring that the equipment is correctly set up and checking the first units of production in each batch. Deborah has collected the following data for the past 12...

Question 1 (a) Explain the main differences between equity and efficiency. [10 marks] (b) Outline the...

Question 1 (a) Explain the main differences between equity and efficiency. [10 marks] (b) Outline the opportunity costs that an adult learner faces. [10 marks] (c) Explain the issues that are normally discussed in microeconomics.

Question 9 [10 marks / 10 minutes] Suppose there are two different mutant alleles of the...

Question 9 [10 marks / 10 minutes] Suppose there are two different mutant alleles of the same gene. Sequence analysis shows that both alleles are single nucleotide substitutions, and that different nucleotide positions within the gene are affected in each allele. Phenotypic analysis shows that one allele is a null allele, and the other is dominant negative (antimorphic). Explain what this information reveals about the two mutations. Give a hypothesis for how these two mutant alleles could show such markedly...

Unemployment (show all work) (10 Marks) Suppose that country a population of 120 made up of...

Unemployment (show all work) Suppose that country a population of 120 made up of a labour force of 100 and 20 children under the age of 15, What is the participation rate. Eight members of the labour force are unemployed What is the unemployment rate? Of the eight unemployed 2 worked in a factory that produced pies this factor has closed down and expected to open up after the pandemic. Describe what type of unemployment this is and why. One...

Subjects