Firm 1 produces x and Firm 2 produces y. Each firm is a price taker. The price of x is $2, and the price of y is $3. y? The cost function of x is given by and the cost function of y is given by 100 - x. How much subsidy per 100 unit of production in x will induce a socially efficient supply? A. $0.75 В. $1.00 C. $1.22 D. $1.50

Firm 1 produces x and Firm 2 produces y. Each firm is a price taker. The price of x is $2, and the price of y is $3. y? The cost function of x is given by and the cost function of y is given by 100 - x. How much subsidy per 100 unit of production in x will induce a socially efficient supply? A. $0.75 В. $1.00 C. $1.22 D. $1.50

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 6SQ

See similar textbooks

Similar questions

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
The market for plasticans is perfectly competitive. Market Supply is givenby Q=3P and Market Demand is given by Q=321-2P. Each extra unit ofplastican produced imposes a negative externality of $7. What is the(absolute value of) Deadweight Loss due to the externality?
Excessive consumption of soft drinks is positively correlated to the incidence of diabetes. Assume that the private total cost of production is PTC(Q)= Q^2 + 2Q. The social cost of soft drinks production is STC(Q)=11.5Q^2. The total benefit of soft drinks production is TB (Q)=50Q-Q^2. What quantity of soft drinks would be produced in a perfectly competitive market? What tax t(s) should the government impose to achieve the socially optimum quantity of soft drinks traded?
2. A market has the inverse demand curve P ^ D * (q) = 300 - 1/2 * q and an inverse supply curve of P ^ D * (q) = 5/2 * q but a total negative externality of E(q) = - 60q (a) Find the competitive equilibrium in this market. (b) Find the marginal social value curve (the sum of the marginal externalities and inverse demand). (c) Find the surplus-maximizing quantity. (d) Calculate the deadweight loss of the competitive equilibrium. (e) Find the optimal per-unit tax for this market. 3. Repeat parts (c) through (f) assuming there is actually a positive externality E(q) = 60q
The market for plasticans is perfectly competitive. Market Supply is givenby Q=7P and Market Demand is given by Q=455-2P. Each extra unit ofplastican produced imposes a negative externality of $8. Implement theoptimal Pigouvian tax/subsidy that implements the efficient outcome.
The market for plasticans is perfectly competitive. Market Supply is givenby Q=5P and Market Demand is given by Q=373-3P. Each extra unit ofplastican produced creates a positive externality of $6. Implement theoptimal Pigouvian tax/subsidy that implements the efficient outcome.What is the Consumer Surplus in the equilibrium with the tax/subsidy?
Suppose the supply curve of a product is given by P = 5 + 0.1Q, where P is the daily rent per unit in dollars and Q is the quantity. The demand curve for the product is 20 – 0.2Q. (i)If the production of each unit of the product imposes $3 per day in externalcosts on others, by how much will the equilibrium number of the productexceed the socially optimal number? (ii)How would the imposition of a tax of $3 per unit on each product affect efficiency in this market?
The government is considering setting up a public health program to cull birds to prevent the spread of bird flu in two regions. The marginal benefit for this program in region A is QA = 90 − 3P and in region B is QB = 250 − 5P. What is the marginal social benefit curve for this program across both regions?
Suppose demand is QD =12 - P supply is QS = 2P. There is a constant positive externality of $6 per unit (Marginal External Benefit, MEB = $6). What subsidy would achieve the efficient allocation? In other words, what subsidy would maximize social surplus? (Do not overthink this one.) Find quantity given this subsidy. What is the social benefit that accrues due to the quantity in the previous part? (Hint: It is MEB times the quantity.) Find (private) producer surplus given this subsidy. Find (private) consumer surplus given this subsidy. How much would this subsidy cost the government? In other words, find government “revenue” (which will end up being a negative number). Add up the answers to the previous four questions to find social surplus. (It should be the same as the area between MSB and MSC.)
Which of the following types of goods and services should be taxed in order to discourage their production? Which of the following types of goods and services should be taxed in order to discourage their production? Goods and services with high inocme elasticities of demand Goods and services with negative externalities Goods and services with high price elasticities of demand Goods and services with positive externalities
Question 23 Refer to Figure 2 in Question 20. At the private market outcome, which area(s) represent the Deadweight Loss to society? (Check all that apply) Group of answer choices a b c d e f g
Market Supply is given by P=2Q and Market Demand is given by P=189-2Q. Each extra produced creates a negative externality of $4. Implement the optimal Pigouvian tax/subsidy that implements the efficient outcome. Then, what is the Consumer Surplus in equilibrium with the tax or subsidy?