Suppose the equation for the demand curve in a market is P=100-1.5QD, where Qp is the quantity demanded and P is the price. Also, suppose the equation for the supply curve in the same market is P=0.5Qs , where Qs is the quantity supplied. Suppose there is an external cost of $8 associated with the production of each unit of the good. What is the socially optimal quantity, and how much is the social cost at this quantity? P=$31; Q=46 P=$22; Q=44 O P=$25; Q=50 O P=$37; Q=50

Suppose the equation for the demand curve in a market is P=100-1.5QD, where Qp is the quantity demanded and P is the price. Also, suppose the equation for the supply curve in the same market is P=0.5Qs , where Qs is the quantity supplied. Suppose there is an external cost of $8 associated with the production of each unit of the good. What is the socially optimal quantity, and how much is the social cost at this quantity? P=$31; Q=46 P=$22; Q=44 O P=$25; Q=50 O P=$37; Q=50

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

See similar textbooks

Similar questions

Consider the production problem discussed in class in which 24 labor hours and 4 machinehours are to be allocated between food (x) production and wine (y) production. Suppose theproduction functions for x and y are as follows:Also, suppose the preferences of the agents are given by:Finally, suppose the MRT is given bywhere x and y denote, respectively, the aggregate quantities of food and wine produced.For each of the following allocations, determine whether they are (i) feasible and (ii) Paretoefficient. If they are inefficient, explain intuitively how it is possible to make someone betteroff without making the other person worse-off.a. ((14,2),(10,2),(5,10),(23,18))b. ((8,2),(16,2),(5,14),(11,18))c. ((14,2),(10,2),(14,21),(14,7))
The average cost of landscaping services for members of a condominium community is $350 per week. Assume that the quantity of landscaping services is perfectly correlated with the number of gardeners per week. Suppose the community consists of seven residents, each with the identical marginal benefit curve for landscaping services. The marginal benefit of the first gardener is $100 per resident. a) How many gardeners would be hired if their services were sold in a market to individual buyers at a price of $350 per week? Explain why the market arrangement is inefficient.
Two alternative programs to save 50 more lives per year entail providing more cardiac intensive care facilities and redesigning dangerous highway interchanges. The price of a new cardiac intensive care unit is $500,000, and the price of redesigning and renovating a highway interchange is $1 million. One combination of the two programs that can save 500 lives is five cardiac units and three highway exit renovations. a.) Is the mix involving five cardiac units and three highway exit renovations cost-effective? b.) Assuming that the marginal products of both programs decline, what needs to be done to achieve the cost-effective mix of programs?
Green et al. (2005) estmate the supply and demand curves for Californa processod tomatoes. The supply function is: \[ \ln \left(Q_{s}\right)=0.200+0.550 \ln (p) \] whereQis the quantify of processing tomatoes in milions of tons per year andpis the price in dollars per ton. The demand function is: \[ \ln \left(Q_{d}\right)=2600-0.200 \ln (p)+0.150 \ln \left(p_{1}\right) . \] wherep1is the price of tornato paste (which is what processing tomatoes are used to produce) in dollars per ton. Supposept=$119Determine how the equilerium price and quantity of processing tomatees change if the price of tomato pasise tails by16%. If the price of tomato paste fals by18%, then the equaborium price will by 5 (Enter a numene response using a real number rounded to two decimal places)
Why is the production possibility frontier concave? Be sure to explain economic intuition behind that fact.
Michael owns a strawberry farm in central California and is deciding how many strawberries to supply this month. Which question appropriately applies the cost-benefit principle to the supply decision? Is the price Michael gets for the extra bushel of strawberries at least as large as the marginal cost? What is the fixed cost of production for Michael's strawberries? If Michael was not producing strawberries, how else could he use his resources? Is Michael "holding all else constant" when making this decision?
"Any social planner who implements efficient outcomes will produce the same output in a given market as the competitive market would." In addition to the conditions of the first welfare theorem, which of the following have to hold in order for the statement in quotes to be true? O a. Consumer tastes are quasilinear. O b. Consumer tastes are homothetic. O c. Production frontiers are homothetic. O d.Both (a) and (c). O e. Both (b) and (c). Of. None of the above.
The market-clearing equations of a general equilibrium model with two markets are given as in1/(w/p)2 = 96 =aw/pwhere a > 0 is some fixed parameter. Under what condition(s) on ? does there exist a general equilibrium?
A Gain from Trade occurs when a unit is sold for a price greater than the unit of the good is worth to a seller and, simultaneously, bought for a price less than the good is worth to a buyer. Consider the first 2 units of the good that would be sold in this market (the vertical red line on the graph). Which answer choices are correct? If Kai and Mint sold one unit each to Gob and Yam at a price of $6, the trade would be mutually beneficial. At a price of $6, Gob would benefit by $3 because she is paying $6 for a unit of the good which is worth $9 to her. At a price of $6, Kai would benefit by $4 because she is getting $6 for a unit of the good which is worth $2 to her. For the first 2 units of the good there is potential gain from trade of $7 for each of the 2 units. For the first 2 units of the good sold the difference between the value to buyer and seller is $9 each. This means there is a potential gain from trade of $9 per unit. If the first 2 units of the…
It is widely believed that land-use regulations, such as zoning laws that restrict real estatedevelopment, raise the marginal cost of housing, thereby reducing market supply. Jackson(2016) for example shows that increased land-use regulations reduce residential permittingby 4-8 percent. By reducing supply, land-use restrictions likely put upward pressure onhousing price; all else being equal, Zabel & Dalton (2011) find that increasing the minimumlot size required per dwelling by one acre raises house prices by about nine percent. By how much do think a nine percent increase in housing price impacts consumerwelfare? Provide a range based on the price elasticities cited above. Please show allof your work, including math and diagrams.  Given your estimates, what would consumers be WTP for to avoid a one acreincrease in the minimum lot size?
Suppose that 2 roommates, Andy and Bob, are trying to pick an apartment in Chicago. Locations can be chosen from set of alternatives A={ x: x exists [0,1]}. Andy and Bob both want to minimize their daily commute but they work at different locations: Andy at xA=0.3, while Bob at xB=0.6. Specifically, their utility functions are: ui(x)= -(x-xi)2. Question: What is the set of all Pareto Efficient outcomes in A, assuming no money can be exchanged.
If it is not possible to increase the output of one good without decreasing the output of the other, when there are only two goods, thenthis situation would describe a point on a production possibilities frontier for the producer.the outcome can be described as efficient.there is no unemployment of resources.All of these outcomes are correct.