Consider the market for plastic straws, in which production causes pollution (air pollution, waste pollution). Quantity demanded is given by Qd=6200-4*P Marginal Private Costs (determines individual supply costs of producers) is given by Qs=2*MPC-1000. Marginal Social Costs (MPC plus the costs of externalities) is given by Qs=2*MPC-1300. Plot these 3 curves on a graph with 6 points at Q=1000, 1100, 1200, 1300, 1400, 1500 What is the deadweight loss if only free market forces are at play (i.e. externalities are not considered by the producers)?
Consider the market for plastic straws, in which production causes pollution (air pollution, waste pollution). Quantity demanded is given by Qd=6200-4*P Marginal Private Costs (determines individual supply costs of producers) is given by Qs=2*MPC-1000. Marginal Social Costs (MPC plus the costs of externalities) is given by Qs=2*MPC-1300. Plot these 3 curves on a graph with 6 points at Q=1000, 1100, 1200, 1300, 1400, 1500 What is the deadweight loss if only free market forces are at play (i.e. externalities are not considered by the producers)?
Chapter16: Public Goods And Public Choice
Section: Chapter Questions
Problem 1.1P: (Optimal Provision of Public Goods) Using at least two individual consumers, show how the market...
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Consider the market for plastic straws, in which production causes pollution (air pollution, waste
pollution).
Quantity demanded is given by Qd=6200-4*P
Marginal Private Costs (determines individual supply costs of producers) is given by
Qs=2*MPC-1000.
Marginal
Plot these 3
What is the
externalities are not considered by the producers)?
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