1. There are 10 producers each with a cost curve C(q) = q². The demand curve is given by D = 2000 - 10p. Each producer creates a MEC (marginal external cost) of $100 per unit produced. a) What is the competitive equilibrium quantity produced and consumed? b) What is the efficient quantity?
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- Question 4 Consider the market for lumber, which we assume here to be perfectly competitive. 4a) Suppose that for each unit of lumber produced, the firms also generate $10 of damage to the environment. Draw the social marginal cost curve in the diagram. 4b) Show the allocatively efficient level of lumber output on the diagram. Explain. 4c) Describe and show the new market outcome if lumber producers are required to pay a tax of $10 per unit of lumber produced. Explain. 4d) In part (c), does the equilibrium price of lumber rise by the full $10 of the tax? Explain. Quantity of LumberExplain 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".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?
- a. Suppose a market is introduced for the externality Eveline causes on Victor. Let us denote by px the price of this externality. Suppose "property rights" are assigned such that Victor has the right not to experience the smell of cooked cabbage. The competitive equilibrium price ratios pm and Px are equal to? b. Derive the market allocation corresponding to the new competitive equilibrium of the economy formed by Eveline and Victor (ce, me) and (cv,mv). c. Is the new competitive equilibrium Pareto efficient?For a competitive market in long-run equlibrium to be Pareto-efficient... Select one: a. Firms do not make profits of any kind b. Marginal private costs are below marginal social costs c. Marginal private costs are above marginal social costs d. Marginal external costs are zero(J) Suppose the production process of a particular good creates a negative externality such as pollution. Other things being equal, would society be better off if this good were produced by a perfectly competitive market or by a monopoly? a. Society would be better off if this good were produced by a perfectly competitive market, because a perfectly competitive market responds to consumers' desires in the long run b. Society would be better off if this good were produced by a perfectly competitive market, because a perfectly competitive market will produce the quantity where Marginal Revenue equals Marginal Cost c. Society would be better off if this good were produced by a monopoly,
- 3. Which of the following conditions holds in an economically efficient competitive market equilibrium? Select one: a. The marginal benefit of the last unit produced and consumed is maximized. b. The deadweight loss is positive but at a minimum. c. Producer and consumer surplus are exactly equal in size. d. There are no positive and no negative external effects from consumption and production.Explain the effect of external cost on the quantity and price of market goods, using the graph. The negative and positive effectsAssume the Senator asks you of the optimal policy to combat CO2 emissions (carbon emissions). The senator is interested in implementing a policy that will reduce emissions from the power sector. The demand for electricity is P = 20 - 2 x Q where Q is amount of electricity demanded, and P is the price of electricity in MWh. The marginal cost of producing electricity is MC = 2 x Q And the damage caused by pollution is MEC = QWhat is the equilibrium price to consumers under competition
- For a competitive market in long-run equlibrium to be Pareto-efficient...Select one:a. Firms do not make profits of any kindb. Marginal private costs are below marginal social costsc. Marginal private costs are above marginal social costsd. Marginal external costs are zero Please tell me which of these multiple awnsers are correct.Thank you1.Suppose that elk hunting permits are sold in a competitive market by landowners who own property where elk reside, and one permit is required to harvest each elk. The demand curve for elk hunting permits is p=180-0.5q . The total cost to the landowners of allowing q elk to be harvested on their properties is C(q)=0.125q^2 . Draw a graph depicting this scenario. 2. Now assume there also is an amenity value associated with the presence of elk in the forest for wildlife watching and ecosystem health. This is a benefit that accrues to the public at large, not only to the elk hunters or property owners. The external benefits from having Q elk remaining in the forest after each hunting season is 50Q . There are Q0 elk in the forest at the beginning of each hunting season, so Q=Q0-q . Draw a graph depicting this scenario.The market for used phones is perfectly competitive without externalities. Market demand is Q=235-2P and Market Supply is P=2Q+11. Suppose the Marginal Cost (MC) increases by $10 at every quantity. What is market Producer Surplus after this increase in MC? (Note: this question is not asking for the change in PS, just the PS after the increase in MWTP) Enter a number only, drop the $ sign