The Operation of Large Trucks in Econoville Causes Damages to Public

question 56

Essay

The operation of large trucks in Econoville causes damages to public roads. The marginal external cost function of operating large trucks in Econoville is: MEC(m) = 0.05m, where m is the number of miles large trucks are driven in Econoville in thousands. The marginal benefit of large truck operation in Econoville is: MB(m) = 1,000 - 2m. How many miles do large trucks drive in Econoville if they are not forced to pay for damage to roads? If Econoville charges a fee for every thousand miles a large truck drives in Econoville, what is the optimal fee? If Econoville sets a standard for the quantity of miles large trucks drive in Econoville, what is the optimal standard? If the profitability of large truck operation in Econoville increases the marginal benefit function to: MB(m) = 1,500 - 2m and Econoville is using a standard, is it optimal for Econoville to increase the standard?

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Definitions:

Nuclear Warheads

Explosive weapons that derive their destructive force from nuclear reactions and can cause massive destruction and loss of life when detonated.

Corporation

A legal entity recognized by law, distinct from its owners, with rights to own assets, incur liabilities, and conduct business.

Sole Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business.

Dealer Markets

Financial markets where dealers buy and sell securities for their own accounts, acting as principals in the transactions.