Please no written by hand solution In this question, the letter “A” denotes the last 4 digits of your student number (for example, if your student number is: 183405022, then A = 5022). The perfectly competitive market for coal in a particular region of Turkey is characterized by the following demand and supply curves: QD = 15000 − 300P and QS = −A + 200P. Moreover, the marginal external cost associated with the production of coal is given by the curve: MEC = Q/800. a) Compute the market equilibrium price and output for coal. b) Compute the socially efficient price and output for coal. (Hint: What is MPB, MPC, MSB and MSC?) c) Explain why the answers you calculated in parts (a) and (b) differ. d) Suppose that the government wants to implement a per-unit tax on coal production so that the socially efficient level of production is reached in the market. Write the MPC of the firm with including tax. What is the level of tax that leads to socially efficient output?
Please no written by hand solution
In this question, the letter “A” denotes the last 4 digits of your student number (for example, if your student number is: 183405022, then A = 5022).
The
Moreover, the marginal external cost associated with the production of coal is given by the curve: MEC = Q/800.
a) Compute the
b) Compute the socially efficient price and output for coal. (Hint: What is MPB, MPC, MSB and MSC?) c) Explain why the answers you calculated in parts (a) and (b) differ.
d) Suppose that the government wants to implement a per-unit tax on coal production so that the socially
efficient level of production is reached in the market.
Write the MPC of the firm with including tax.
What is the level of tax that leads to socially efficient output?
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