2. Assume the supply and demand for paper is given by the following: Demand: P =1500 – 0.1Q Private-cost supply: P = 100 + 0.1Q Marginal external cost: $200 Social-cost supply: P = 300 + 0.1Q a. Solve for equilibrium P, Q, and total gross gains from trade assuming no regulation (use private-cost supply) b. Solve for total external cost under #1 above c. Solve for the true or net gains from trade under #1 above (total gross gains from trade – total external cost)
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- 2) Use the figure below to answer the following questions. Price and cost (dollars per tonne of paper) MSC 15 MC 14 13 12 11 D = MSB %3D 30 40 50 60 70 Quantity of paper (tonnes) Figure 1 a) Refer to Figure 1 What is the unregulated equilibrium in the paper market? b) Refer to Figure 1 What is the marginal external cost in this market? c) Refer to Figure 1 What is needed to achieve the efficient output in the market?Assume integer quantities. Assume the following supply and demand schedules for a perfectly competitive market. 4 $24.50 $16.50 $18 $13 2 3 5 6 MWTP $33.50 $28.50 $13.50 $10.50 $4.50 $33 MC $2 $7 $24 $29 Additionally assume a marginal external benefit of $10. What is the efficient quantity?Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 35 For the questions assume that there is a $3 external COST. 1. Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the market is perfectly competitive and that "one allowance" lets you produce one unit of the good.) 2. What will they be worth if the quantity is capped at 500? 3. What if it is capped at 700?
- Assume integer quantities. Assume the following supply and demand schedules for a perfectly competitive market without externalities. 1 3 4 6 MWTP $32.50 $27.50 $6 $25.50 $12 $20.50 $12.50 $7.50 $4.50 MC $2 $16 $21 $30 $32 What is total surplus in equilibrium? Round to two decimal places and do not include the currency symbol. If your answer is $1.125, enter 1.13.At the price from the previous question, what quantity might private (non-government) suppliers produce? a Question 13.15 Homework Unanswered с Price d b Q2 Q1 P₁ P₂ P₁ Q4 P₁ Q3 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Q Unanswered ą Q₂ Q₂ Supply External benefit per unit of output Marginal social benefit Demand Quantity0 12. When a firm is maximizing profit it will necessarily be: A) maximizing profit per unit of output. B) maximizing the difference between total revenue and total cost. C) minimizing total cost. D) maximizing total revenue. S₁₁ S Q & Refer to the above diagram in which S is the market supply curve and St is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government interference, this market will result in: A) an optimal allocation of society's resources. B) an underallocation of resources to this product. C) an overallocation of resources to this product. D) a higher price than is consistent with an optimal allocation of resources. 14. Refer to the above diagram in which S is the market supply curve and St is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. If the…
- Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per ton. PRICE (Dollars per ton of bolts) 700 630 560 490 420 350 280 210 140 70 0 0 C ☐ L 1 U D 0 U 2 0 DO O 3 4 5 QUANTITY (Tons of bolts) ☐ Supply (Private Cost) O Demand (Private Value) 7 Social Cost (?) The market equilibrium quantity is 4.5 ▼ tons of bolts, but the socially optimal quantity of bolt production is 3 To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts. ▼tons. of $ per ton"Since the occurrence of COVID-19 health crisis in Gaza in early 2020, severalexternalities existed during the partial, and complete economic lockdown."Answer the following questions: b. Give an example on an externality (domestic or international) that occurredduring COVID-19 economic crisis.QUESTION 3 Use the figure below to answer the following questions: Price and cost (dollars per tonne of paper) MSC 15 MC 14 13 12 11 D= MSB 30 40 50 60 70 Quantity of paper (tonnes) a. What is the price and quantity in the unregulated equilibrium in the paper market? b. A tax of per tonne is necessary to achieve the efficient output of tonnes of paper. c. What is the marginal external cost or benefit?
- Which of these is a negative production externality? An airline manufacturer must hold up production of a plane at great cost due to delays in its global supply chain. A cereal manufacturer suffers losses due to a drought and unexpected increases in market prices of grains that it uses in its cereals. O Consumers complain to the wrong regulators about price gouging in gasoline markets. A producer of lead for batteries that are used nationwide emits noxious gases in its factory town and local people are getting sick. Thch SaveThe market for paper in a particular region in the United States is characterized by the following demand and supply curves: Qp = 155,000 – 2,000P and Qs = 35,000+ 2,000P where Q is the quantity demanded in 100-pound lots, Qs is the quantity supplied 100-pound lots, and P is the price per 100-pound lot. Currently there is no attempt regulate the dumping of effluent into streams and rivers by the paper mills. As a result, dumping widespread. The marginal external cost (MEC) associated with the production of paper is given by the curve MEC = 0.0006Qs. made to monitor or regulate the dumping of effluent. (Enter your responses rounded to two decimal places.) a. Calculate the output and price of paper if it is produced under competitive conditions and no attempt Without regulation, the price. $per 100-pound lot, and the quantity is 100-pound lots.3. Suppose that the inverse market demand curve for cloth is p = 150 - 20, the private marginal cost (unregulated competitive market supply) is MCp = 75 + Q, and the private marginal damage from pollution is MCd = 20. a) What is the unregulated competitive equilibrium quantity and price? b) What is the social marginal cost of production and social equilibrium quantity and price? c) What specific tax t (per unit) would result in the social optimum?