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You are the manager of a paper mill and have been subpoenaed to appearbefore a joint session of the Senate Consumer Affairs and the Senate Environ-mental subcommittees. The Consumer Affairs Subcommittee is interested inyour testimony about the pricing practices of your company because a recentnews magazine reported that your markups are 250 percent. The Environmen-tal Subcommittee is interested in exploring ways to reduce the pollution asso-ciated with your paper mill. In particular, you know that one senator on theEnvironmental Subcommittee will ask you to justify why the firm should notbe charged a per-unit tax on the firmâ€™s output to compensate for the pollutionit discharges into a major river. Devise a game plan for responding to thequestions that will be raised in the joint session of the subcommittees.Section 16(a) of the Securities and Exchange Act of 1934, as amended in1990, requires that the officers, directors, and principal shareholders of com-panies disclose the extent of their ownership of equity securities of the com-pany and any changes in the ownership. Section 16(b) permits companies torecover trading profits realized by such people arising from short-swing trans-actions in the company securities. Do you think that, as a result of these laws,the government will be forced to spend more money on its auditing andenforcement efforts? Explain.Enrodes is a monopoly provider of residential electricity in a region of north-ern Michigan. Total demand by its 2 million households is Q d 1,000 P,and Enrodes can produce electricity at a constant marginal cost of $2 permegawatt hour. Consumers in this region of Michigan have recently com-plained that Enrodes is charging too much for its services. In fact, a few con-sumers are so upset that theyâ€™re trying to form a coalition to lobby the localgovernment to regulate the price Enrodes charges. If all the consumers of thisregion joined the coalition against Enrodes, how much would each consumerbe willing to spend to lobby the local government to regulate Enrodesâ€™s price?Do you think the consumers will be successful in their efforts? Explain.Chinaâ€™s entry into the World Trade Organization (WTO) is likely to creat
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