The demand for energy-efficient TV is P = 100/Q, while the supply (marginal private cost) is MPC = Q. By reducing demand on the electricity network, energy- efficient TV generate an external marginal benefit, MEB = eQ. (a) What is the equilibrium quantity and price of energy-efficient TV in the private market? (b) If the socially efficient number of energy-efficient TV is Q = 20, what is the value of e? (c) If the government subsidized production of energy efficient TV by $S per unit, what level of the subsidy would induce the socially efficient level of production?

The demand for energy-efficient TV is P = 100/Q, while the supply (marginal private cost) is MPC = Q. By reducing demand on the electricity network, energy- efficient TV generate an external marginal benefit, MEB = eQ. (a) What is the equilibrium quantity and price of energy-efficient TV in the private market? (b) If the socially efficient number of energy-efficient TV is Q = 20, what is the value of e? (c) If the government subsidized production of energy efficient TV by $S per unit, what level of the subsidy would induce the socially efficient level of production?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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