What are the first and the second degree price discriminations? Do they both
meet the criterion of Pareto efficiency? Why? (10%)
There are two firms. Firm 1 produce good x in a perfectly competitive market
and the price is p . With the production x at a cost c(x) , it also imposes a
cost e(x) on firm 2. This means that for every unit x produced, a unit of
“pollution” is produced with it. Let the profits functions of firm 1 and firm 2 be
px − c(x) and − e(x) , respectively. This is what we call the problem of
externality. Consider the following solutions: (15%)
(1) If internalizing the externality is possible, please compare the output level
before and after the internalization. (5%)
(2) Please identify the rate of Pigovian tax. (5%)
(3) Now, assume that the pollution can be sold and bought at a unit price r ,
please show that when the demand and supply of the pollution are equal,
the pollution level is the same as the one in case (1). Is r positive or
negative? Explain. (5%)
The ECFA was signed last summer and the early-harvested items were traded
according to the new terms starting from Jan. 1, 2011. Many economists are
worried about that the wages in Taiwan will converge to the wage level in
mainland China. This is called Factor-Price Equalization which is predicted by
the Heckscher-Ohlin model. Please explain why the model has such a
prediction. Moreover, please present two reasons that cause this prediction to
be inaccurate. (15%)
可觀看題目詳解,並提供模擬測驗!(免費會員無法觀看研究所試題解答)