Suppose demand is Upper Q Subscript Upper D equals 20 minus Upper PQD = 20−P and supply is Upper Q Subscript Upper S Baseline equals Upper PQS=P. There is a constant positive externality of $4 per unit (Marginal External Benefit, MEB equals $ 4MEB =$4). The adjacent graph shows the supply curve described above. On this graph illustrate the demand curve and marginal social benefit curve and find the socially efficient point. 1.) Use the line drawing tool to illustrate the demand curve given above. Label this curve 'D'. 2.) Use the line drawing tool to illustrate the marginal social benefit curve given the information above. Label this curve 'MSB'. 3.) Use the point drawing tool to illustrate the socially efficient price and quantity. Label this point 'A'. Carefully follow the instructions above, and only draw the required objects.
Suppose demand is Upper Q Subscript Upper D equals 20 minus Upper PQD = 20−P and supply is Upper Q Subscript Upper S Baseline equals Upper PQS=P. There is a constant positive externality of $4 per unit (Marginal External Benefit, MEB equals $ 4MEB =$4). The adjacent graph shows the supply curve described above. On this graph illustrate the demand curve and marginal social benefit curve and find the socially efficient point. 1.) Use the line drawing tool to illustrate the demand curve given above. Label this curve 'D'. 2.) Use the line drawing tool to illustrate the marginal social benefit curve given the information above. Label this curve 'MSB'. 3.) Use the point drawing tool to illustrate the socially efficient price and quantity. Label this point 'A'. Carefully follow the instructions above, and only draw the required objects.
Chapter8: Market Failure
Section: Chapter Questions
Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...
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Suppose demand is
Upper Q Subscript Upper D equals 20 minus Upper PQD = 20−P
and supply is
Upper Q Subscript Upper S Baseline equals Upper PQS=P.
There is a constant positive externality of
$4
per unit (Marginal External Benefit,
MEB equals $ 4MEB =$4).
The adjacent graph shows the supply curve described above. On this graph illustrate the demand curve and marginal social benefit curve and find the socially efficient point.1.) Use the line drawing tool to illustrate the demand curve given above. Label this curve 'D'.
2.) Use the line drawing tool to illustrate the marginal social benefit curve given the information above. Label this curve 'MSB'.
3.) Use the point drawing tool to illustrate the socially efficient price and quantity. Label this point 'A'.
Carefully follow the instructions above, and only draw the required
objects.
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