for a. Write the social marginal benefit equation: MBS = Type integers. b. The socially optimal number of street lights is places. Hint: Type the number in two decimal
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- Principles of Microeconomics Prof. Pinyuan Dong Due October 12, 2022 Problem Set 2 A. Suppose the demand and supply for the market of cigarettes in a city is given by QD = 400-50P, Qs = 50P. 1. Graph the demand and supply curves. What is the market equilibrium price and quantity? 2. The city council wants to discourage smoking. If the socially optimal demand for cigarettes is QD 200-50P, what can the city council do to achieve the socially optimal demand? 3. What is the quantity of cigarette sold after the government takes appropriate actions? How much do consumers pay and how much do producers get? Is the government action effective in its objective of discouraging cigarette consumption? B. Suppose the local gas station in a small town sells regular gasoline at $4/gallon. The gas station sells 100 gallons in a day. Due to global gas prices, it increased the price to $5/gallon. The next day, the gas station is only selling 90 gallons a day 1. Using these two points, calculate the price…1. Suppose 20 people each have the demand Q = 20 − P for streetlights and 5 people have the demand Q = 18 − 2P for streetlights. The cost of building each streetlight is $10.a. Write the social marginal benefit equation: MBS = _______ - _________ Q/2. Hint: Type integers.b. The socially optimal number of street lights is ________. Hint: Type the number in two decimal places. 2. The __________ theorem states: As long as negotiation costs are negligible and affected consumers can negotiate freely with each other, the court could allocate the entitlement to either party, and an efficient allocation would result. Hint: The answer is case sensitive. PLEASE FILL OUT THE SPACESTwo towns, each with three residents, are decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost $360. In each town, somepeople enjoy fireworks more than others.a. In the town of Bayport, each of the residentsvalues the public good as follows:Frank $50Joe $100Callie $300Would fireworks pass a cost–benefit analysis?Explain.b. The mayor of Bayport proposes to decide bymajority rule and, if the fireworks referendumpasses, to split the cost equally among allresidents. Who would vote in favor, and whowould vote against? Would the vote yield thesame answer as the cost–benefit analysis?c. In the town of River Heights, each of the residentsvalues the public good as follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost–benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if the fireworksreferendum passes, to split the cost equallyamong all residents. Who would vote in favor,and who would vote against? Would…
- Asap plz... Use a diagram and explain how the total net benefit will be changed if an externality exists in a marketASAP plz Why don't people/stores make different decisions? Cost is a factor: a case of foam take-out containers costs $25, compared with $58 for paper and recyclable-plastics. How does this affect the firm's profit? Are consumers willing to pay more? Negative externality Consider the demand and supply given above. Suppose there is an external cost given by MEC=5Q. Find social equilibrium price and quantity. Draw a graph and label both private and social equilibrium.Don't give handwritten answers please and Do bo a. Draw the demand, supply, and social marginal cost curves on the same graph. b. What is the socially efficient quantity of the good? Show your work.
- d. What is the emissions tax that needs to be imposed to achieve the social optimum? Add this to your graph. e. What is the economic incidence of this emissions tax? In other words, what proportion of this tax will be paid by producers of this product and what proportion of the tax will be paid by consumers?on 7 When externalities exist, buyers and sellers red Select one: d out of a. neglect the external effects of their actions and the market equilibrium is efficient b. do not neglect the external effects of their actions and the market equilibrium is efficient on c. neglect the external effects of their actions and the market equilibrium is not efficient O d. do not neglect the external effects of their actions and the market equilibrium is not efficient on 8 A positive consumption externality will cause a market to red Select one: d out of a. produce less than is socially desirable O b. produce more than is socially desirable on c. produce more than is market optimal O d. produce less than is market optimal on 9 If only a few people are affected by an externality red Select one: d out of a. then it is likely that Pigovian taxes will provide the most efficient solution to the externality O b. then it is likely that command and control regulation will provide the most efficient solution…the socially optimal price? place the line segment labled pollution limit In accordance with the 1990 Clean Air Act, the hypothetical state of South Smog imposes a pollution limit on the market for steel manufacturing shown on the graph below. Place the line segment labeled "Pollution limit" at the optimal pollution limit. Price and cost ($ per ton) 10 A Pollution limit B 9 Marginal social cost 8 7 4 2 1 0 о D Marginal cost Demand = marginal benefit 2 4 6 8 10 12 14 16. 18 20 Quantity in thousands of tons
- urco Use the chart below to answer the following question. The Socially Optimal Quantity of Pollution Select one: O a. $83 O b. $250 O c. $500 O d. $167 Marginal social cost, marginal social benefit $500 250 167 0 MSC MSB 83 125 Quantity of pollution The chart above shows the marginal social cost (MSC) and marginal social benefit (MSB) of pollution. Using the information provided in the figure, we can conclude the optimal Pigouvian tax per unit of pollution is:Suppose Scott and Bob live on the same street. in the winter, both of them like their street plowed. Bob's demand is given by 0 = 40 - P, and Scott's demand is gren by 0 = 30 - 2P. Suppose the marginal cost of plowing the snow is constant at $35 (a) What is the social marginal benefit curve? (b) What is the socially efficient amount of plowing? (c) What would be the socially efficient amount of plowing if the marginal cost of plowing were $5?Two towns, each with three members, are decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost $360. ln each town, somepeople enjoy firewurks more than others.a. ln the town of Baypor~ each of the residents val•ues the public good as follows,F,ank $50Joe $100Call ie $300Would fireworks pass a cost-benefit analysis?Explain.b. The mayor or Bayport proposes to decide bymajority rule and, if the fireworks referendumpasses, to split the cost equally among allresidents. W'ho would vole in favor, and whowould vote against? Would the vote yield thesame answer as the cost-benefit anal)•Sis?c. In the town of River Heights, each of the residentsvalues the public good as follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost-benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if the fireworksreferendum passes, lo split the cost equally amongall residents. Who would vote in favor, and whowould vote against? Would…