P(Q) (or MSB) = 50 - 0.5Q Р() (MPC) %3 25 + 0.5Q MEC = 0.5Q %3D Pc (Competitive Equilibrium Price) = 37.50 Ос (Соmpetitive Equilibrium Quantity) %3D 25 Pe (Efficient Equilibrium Price) = 41.67 Qe (Efficient Equilibrium Quantity) = 16.66 1) Sketch the curves for these functions and illustrate the competitive equilibrium and label Pc and Qc and efficient equilibrium (labelling Pe and QE). 2) On the diagram from part 1, illustrate the areas that correspond to the loss in profit for the firm, the total gain to society and the net gain to society when comparing the competitive equilibrium to the efficient equilibrium

P(Q) (or MSB) = 50 - 0.5Q Р() (MPC) %3 25 + 0.5Q MEC = 0.5Q %3D Pc (Competitive Equilibrium Price) = 37.50 Ос (Соmpetitive Equilibrium Quantity) %3D 25 Pe (Efficient Equilibrium Price) = 41.67 Qe (Efficient Equilibrium Quantity) = 16.66 1) Sketch the curves for these functions and illustrate the competitive equilibrium and label Pc and Qc and efficient equilibrium (labelling Pe and QE). 2) On the diagram from part 1, illustrate the areas that correspond to the loss in profit for the firm, the total gain to society and the net gain to society when comparing the competitive equilibrium to the efficient equilibrium

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter5: Supply, Demand, And Price: Applications

Section5.7: Application 7: Why Do Colleges Use Gpa,s Actss, And Sats, For Purposes Of Admission?

Problem 2ST

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