Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 17, Problem 28APA
To determine
Voucher per student.
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Use the table below to answer the questions:
Quantity
Supplied (Private Supplied (Social
Cost only)
12,000
14,000
17,000
20,000
24,000
Quantity
Quantity
Demanded
Price
19,000
14,000
9000
5000
1000
$50
$55
$60
$65
$70
Cost)
6000
7500
9000
11,000
14,000
(a) Find the equilibrium price, assuming sellers ignore negative externalities.
(b) Find the equilibrium quantity, assuming sellers ignore negative externalities.
(c) Find the optimal price, including external costs.
(d) Find the optimal quantity, including external costs.
price
100
90
MPC-MSC
80
70
30,67.5
60
40,60)
50
30,45)
40
40,37.5)
MSB
30
20
10
MPB
10 20 30 40 50 60 70 80 90 100
quantity of trees (thousands)
Trees planted in urban areas improve air quality, reduce soil erosion, and moderate
temperatures in hot cities. The figure depicts the market for trees planted in Tempe, Arizona.
What is the value of the deadweight loss if the market is unregulated?
To review this concept, see the section Positive Externalities.
100
50
225
112.5
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4. The paper industry has the demand and supply curves shown below:
Price of paper
Quantity demanded
Quantity supplied
80
40
70
50
4
60
60
50
70
a. Suppose that this industry results in extreme externalities. What can be
said about its optimal output?
b. Draw the supply and demand curves for paper. Does the supply curve
reflect the true social costs of producing the product? If not will a supply
curve reflecting the true social costs lies above or below the supply curve
you have drawn?
c. What is the equilibrium price of paper? From the point of view of
reflecting the true social costs, is this price the correct one, or too low or
too high?
Chapter 17 Solutions
Macroeconomics
Ch. 17.1 - Prob. 1RQCh. 17.1 - Prob. 2RQCh. 17.2 - Prob. 1RQCh. 17.2 - Prob. 2RQCh. 17.2 - Prob. 3RQCh. 17.2 - Prob. 4RQCh. 17.3 - Prob. 1RQCh. 17.3 - Prob. 2RQCh. 17.3 - Prob. 3RQCh. 17.4 - Prob. 1RQ
Ch. 17.4 - Prob. 2RQCh. 17.4 - Prob. 3RQCh. 17.4 - Prob. 4RQCh. 17 - Prob. 1SPACh. 17 - Prob. 2SPACh. 17 - Prob. 3SPACh. 17 - Prob. 4SPACh. 17 - Prob. 5SPACh. 17 - Prob. 6SPACh. 17 - Prob. 7SPACh. 17 - Prob. 8SPACh. 17 - Prob. 9SPACh. 17 - Prob. 10APACh. 17 - Prob. 11APACh. 17 - Prob. 12APACh. 17 - Prob. 13APACh. 17 - Prob. 14APACh. 17 - Prob. 15APACh. 17 - Prob. 16APACh. 17 - Prob. 17APACh. 17 - Prob. 18APACh. 17 - Prob. 19APACh. 17 - Prob. 20APACh. 17 - Prob. 21APACh. 17 - Prob. 22APACh. 17 - Prob. 23APACh. 17 - Prob. 24APACh. 17 - Prob. 25APACh. 17 - Prob. 26APACh. 17 - Prob. 27APACh. 17 - Prob. 28APACh. 17 - Prob. 29APACh. 17 - Prob. 30APA
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