Consider the Following Illustrative Numbers,applying to a Manufacturing Firm for Which

question 6

Essay

Consider the following illustrative numbers,applying to a manufacturing firm for which a pollution-control regulation has been proposed:
$$\begin{array} { | l | l | } \hline { \text { Estimated Production Costs: } } \\\hline \text { Before the regulation: } & \$ 8900 \\\hline \text { In the future with the regulation: } & \$ 9700 \\\hline \text { In the future without the regulation: } & \$ 9200 \\\hline\end{array}$$
Determine the before/after costs of the regulation and the with/without costs of the regulation.Which of these two costs best reflects the true cost of the regulation?

---

Definitions:

Unit Elastic

A situation in which a one percent change in price causes an equal percentage change in quantity demanded or supplied.

Very Inelastic

Describes a situation where the demand or supply for a product is barely affected by changes in the price.

Calculate Elasticity

entails determining the degree to which the quantity demanded or supplied of a good changes in response to a change in its price.

Unit Elastic

A situation in which the percentage change in quantity demanded or supplied is equal to the percentage change in price.