LO13-3 4. According to the News on page 288, how much will annual shipping costs increase for each saved life?
LO13-3 5. If the average U.S. worker produces $100,000 of output per year, what is the annual opportunity cost of the federal regulatory workforce (Table 13.1)?
LO13-4 6. Suppose a corporation has two subsidiaries, one of which is unregulated and sells all of its output to the other, regulated subsidiary. Permitted profits at the regulated subsidiary are equal to
10 percent of total costs. Here is the initial profit picture for the subsidiaries:
|
Unregulated Subsidiary
|
Regulated Subsidiary
|
|
Total revenue
|
$800,000
|
N/A
|
|
Total costs
|
$500,000
|
$1 million
|
|
Total profit
|
$300,000
|
$100,000
|
If the unregulated subsidiary doubles its selling price, what happens to profits at
(a) The unregulated subsidiary?
(b) The regulated subsidiary?