Consider Product NE, which has a negative externality associated with its’ production and use ( i.e., the “Incidental Cost” of each unit of Product NE is greater than zero). You are told that : * The “Efficient” Output of Product NE = 100 units * The Free-Market Equilibrium Output of Product NE = 125 units * The Total Surplus ( to society) on Unit Number 50 ( i.e., on that one unit ALONE) is equal to $ 45 * The Cumulative Surplus on the first 100 units produced is equal to $ 6,000 ( i.e., the sum of the surplus( to society) on ALL 100 units adds up to $ 6,000) Is the Consumer’s Surplus + Producer’s Surplus on Unit Number 50 ( i.e., the sum of CS + PS) greater than $ 45, less than $ 45, or exactly equal to $ 45 ( just circle your answer) ? Greater than $ 45 Less Than $ 45 Exactly $ 45 *Draw a graph to explain your answer c.) Is the Cumulative Surplus on the first 125 units ( i.e., ALL 125 units together) greater than $ 6,000, less than $ 6,000, or exactly equal to $ 6,000 ? Explain your answer.
Consider Product NE, which has a negative externality associated with its’ production and use ( i.e., the “Incidental Cost” of each unit of Product NE is greater than zero). You are told that :
* The “Efficient” Output of Product NE = 100 units
* The Free-
* The Total Surplus ( to society) on Unit Number 50 ( i.e., on that one unit ALONE) is equal to $ 45
* The Cumulative Surplus on the first 100 units produced is equal to $ 6,000 ( i.e., the sum of the surplus( to society) on ALL 100 units adds up to $ 6,000)
- Is the
Consumer’s Surplus + Producer’s Surplus on Unit Number 50 ( i.e., the sum of CS + PS) greater than $ 45, less than $ 45, or exactly equal to $ 45 ( just circle your answer) ?
Greater than $ 45 Less Than $ 45 Exactly $ 45
*Draw a graph to explain your answer
c.) Is the Cumulative Surplus on the first 125 units ( i.e., ALL 125 units together) greater than $ 6,000, less than $ 6,000, or exactly equal to $ 6,000 ? Explain your answer.
Step by step
Solved in 5 steps with 19 images
