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- Lynn owns a tutoring center that supplies SAT and ACT test preparation service for high school students on an hourly basis. Consider the demand, marginal revenue, and marginal cost she faces, shown in the following graph attached below. A. Does Lynn’s business have market power? Briefly explain your answer. B. In order to maximize her profits, how many hours of tutoring should Lynn’s business supply, and at what price? C. What would the socially efficient quantity be in this market and why is the profit-maximizing outcome inefficient?As an economist how will you evaluate the income effect on the technologyBriefly explain why a positive externality creates deadweight loss. You can use a graph to support your answer.
- Briefly explain....Briefly explain what is meant by the term "externality" and how it occurs. What are some ways (name at least 2) in which a negative externality can be corrected?Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD:1 Demand: P = 1,000 – 10Q Marginal Revenue: MR = 1,000 – 20Q Marginal Cost: MC = 100 + 10Q a. Find the price and quantity that maximize the company’s profit. b. Find the price and quantity that would maximize social welfare. c. Use a graph to illustrate the DWL and calculate the dollar value of the DWL.
- Give three definitions of market efficiency used by economists. How does efficiency fit into the definition of market failure given by economists? Which market structure represents a failing market the least likely?The amount that a beggar outside the Toronto Stack Exchange Building can collect in Average revenues depends negatively on the number of beggars; r = 200 - 4n. A beggar has the choice of standing in line to receive welfare benefits of 50 dollars. a. Graph and determine the non-cooperative solution and the cooperative solution. Show the efficiency loss. b. Illustrate how the cooperative solution could be achieved if the government introduced a per-unit tax on the revenues of each beggar.There are three industrial firms in Happy Valley.FirmInitial PollutionLevelCost of ReducingPollution by 1 UnitA 30 units $20B 40 units $30C 20 units $10The government wants to reduce pollution to 60 units,so it gives each firm 20 tradable pollution permits.a. Who sells permits and how many do they sell?Who buys permits and how many do they buy?Briefly explain why the sellers and buyers are eachwilling to do so. What is the total cost of pollutionreduction in this situation?b. How much higher would the costs of pollutionreduction be if the permits could not be traded?