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 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? 30

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 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? 30

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Explain the effect of external cost on the quantity and price of market goods, using the graph. The negative and positive effects
2. A perfectly competitive market exists for almonds. Demand for almonds is Q= 200 – P where P is the price of almonds and Q is the total quantity of almonds. The private total Q? The production of almonds cost for the unregulated market is C 50 + 80Q + Q² First, solve for the 2 creates an externality where the total external cost is E = Pigouvian tax (per unit of output of almonds) that results in the social optimum. Suppose that one company, MegaAlmonds, becomes a monopolist in the production of almonds. What is the optimal tax that should be placed on the almonds in this case?
Explain the "Externalities theory" in general Explain the concept of "social marginal cost" Give one clear example of production externality and its influence on the "social marginal cost".
BN12.2 (a) Case: The market for dry cleaning is reflected by the demand and supply curves (Q is in thousands): Pa = 5-Q Ps= 2+2Q Producing dry cleaning creates ground water pollution with a constant marginal external cost of 1.2. Question: (a) Sketch a graph that shows the Dsoc, Spriv, Ssoc, Qopt (societal perspective) and DWL in an unregulated market (No need to label the values in the graph)?
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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?
Only typed answer You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 3Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 14Q. Instruction: Round your answers to the nearest two decimal places. a. What is the socially efficient level of output? units b. Given these costs and market demand, how much output would a competitive industry produce? units c. Given these costs and market demand, how much output would a monopolist produce? units d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output. Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit. Pollution taxes…
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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 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? If there is an external benefit of $3, what is the efficient quantity? For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? 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…
QUESTION 24 55.00 50.00 45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 What is the deadweight loss from the externality a. $75,000 b. $100,000 Supply c. $80,000 Ⓒd. $50,000 MSC M 5000 10000 15000 20000 25000 30000 35000 40000 Demand
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