Aside from greenhouse gas emissions [e.g., carbon dioxide (CO2)], vehicles emit pollutants such as nitrogen oxides (NOx), which contribute to the formation of ozone and acid rain, and carbon monoxide (CO), the ingestion of which reduces the flow of oxygen in the bloodstream and is particularly dangerous to persons with heart disease. Assume that the following equation describes these marginal external costs: EMC= 0.125Q Inverse Demand Function: MB = 180,000–QdMarginal Cost Function:MC = 0.25 Qs c.What is the social marginal cost function (SMC)? Graph this function along with the private marginal cost (label this PMC) and marginal benefit functions. d.Determine the socially efficient equilibrium price and quantity and denote them by Psocand Qsoc. Show your answer both graphically and mathematically. e.What is total surplus at this social optimum (Ps, Qs)? Calculate totalsurplus numerically as well as indicate the area on the graph that corresponds with totalsurplus. f.Calculate the deadweight loss created by the private market. C and D
Aside from greenhouse gas emissions [e.g., carbon dioxide (CO2)], vehicles emit pollutants such as nitrogen oxides (NOx), which contribute to the formation of ozone and acid rain, and carbon monoxide (CO), the ingestion of which reduces the flow of oxygen in the bloodstream and is particularly dangerous to persons with heart disease. Assume that the following equation describes these marginal external costs: EMC= 0.125Q Inverse Demand Function: MB = 180,000–QdMarginal Cost Function:MC = 0.25 Qs c.What is the social marginal cost function (SMC)? Graph this function along with the private marginal cost (label this PMC) and marginal benefit functions. d.Determine the socially efficient equilibrium price and quantity and denote them by Psocand Qsoc. Show your answer both graphically and mathematically. e.What is total surplus at this social optimum (Ps, Qs)? Calculate totalsurplus numerically as well as indicate the area on the graph that corresponds with totalsurplus. f.Calculate the deadweight loss created by the private market. C and D
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter14: Environmental Economics
Section: Chapter Questions
Problem 4SQ
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Aside from greenhouse gas emissions [e.g., carbon dioxide (CO2)], vehicles emit pollutants such as nitrogen oxides (NOx), which contribute to the formation of ozone and acid rain, and carbon monoxide (CO), the ingestion of which reduces the flow of oxygen in the bloodstream and is particularly dangerous to persons with heart disease. Assume that the following equation describes these
marginal external costs: EMC= 0.125Q
Inverse Demand Function: MB = 180,000–QdMarginal Cost Function:MC = 0.25 Qs
c.What is the social marginal cost function (SMC)? Graph this function along with the private marginal cost (label this PMC) and marginal benefit functions.
d.Determine the socially efficient equilibrium price and quantity and denote them by Psocand Qsoc. Show your answer both graphically and mathematically.
e.What is total surplus at this social optimum (Ps, Qs)? Calculate totalsurplus numerically as well as indicate the area on the graph that corresponds with totalsurplus.
f.Calculate the deadweight loss created by the private market.
C and D
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