• The demand for a good is QD = 160-2P with P being the price and QD denoting the quantity demanded. The supply for the good is Qs = -40 + 2P with Qs representing the quantity supplied. The production of the good creates a marginal external cost P = Q. • Q6. Determine the equilibrium quantity in the absence of any regulation. • Q7. Determine the consumer surplus in the absence of any regulation. Q8. Determine the producer surplus in the absence of any regulation. • Q9. Determine the total external cost in the absence of any regulation. • Q10. Determine the efficient (or social) equilibrium quantity. • Q11. Determine the deadweight loss associated with the negative externality. .

• The demand for a good is QD = 160-2P with P being the price and QD denoting the quantity demanded. The supply for the good is Qs = -40 + 2P with Qs representing the quantity supplied. The production of the good creates a marginal external cost P = Q. • Q6. Determine the equilibrium quantity in the absence of any regulation. • Q7. Determine the consumer surplus in the absence of any regulation. Q8. Determine the producer surplus in the absence of any regulation. • Q9. Determine the total external cost in the absence of any regulation. • Q10. Determine the efficient (or social) equilibrium quantity. • Q11. Determine the deadweight loss associated with the negative externality. .

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...

See similar textbooks

Similar questions

Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
Suppose a positive externality is associated with college enrollment. Assume that college instruction is sold in a competitive market and that the marginal social cost of providing it increases with enrollment. Show how a corrective subsidy to college students will increase the market price of instruction. Show the net gain in well-being possible from the subsidy and the amount of tax revenue required to finance its costs on your graph. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Consider a public goods problem. Assume a community has 10 people each with: MBP = 10 – Q, where Q is equal to the quantity of the public good provided in the community. Assume no externality in public good production: MCP = MCS = 10. Assume a rich philanthropist offers to pay half the cost of every voluntary donation. Given this subsidy, the community will choose to donate ____ total units of Q with a deadweight lost of ____ ?
In a market with external costs, the market price is: regulated by the government. lower than the efficient price. equal to the efficient price. higher than the efficient price
suppose that scientists discover that this particular product has a significant Positive Externality. As we learned in class, the Demand curve is a depiction of marginal private benefit (MPB). However, the existence of the positive externality means that for every given output level, Marginal Social Benefit (MSB) is higher than Marginal Private Benefit (MPB). Add this MSB1 to the same graph you created for Question 5. Absent any government intervention, what are the equilibrium price P1, equilibrium quantity Q1, the resulting Consumer Surplus CS1, and the resulting Producer Surplus PS1? Indicate the Socially Optimal output, QSO1. Graphically indicate the size of Dead Weight Loss DWL1 if there is such a loss. In the narrative, please explain how you determined the socially optimal output level and the presence (or absence) of dead-weight loss in this situation. Is the market producing too much, too little, or just the right amount of the product with a positive externality in the…
Given the following information: Initially, a perfectly competitive market for a product is in equilibrium, with an upward-sloping straight-line market supply curve, a downward-sloping straight-line market demand curve, and a market price of $30 per unit. Consumption of this product causes pollution. Initially, the marginal external cost of the pollution caused by consuming the product is $9 per unit. There is no government policy toward the externality. The government then mandates a shift to a new product version, and all firms adopt and produce the latest version. Consumers view the new product version as equally as good as the initial product version. Consumption of the new version of the product causes less pollution, and the marginal external cost decreases by $3 per unit. For each firm, production of the new product version does not change fixed cost, but it does increase average variable cost by $3 per unit. If necessary, the market adjusts to a new equilibrium. There is…
Automobile production imposes a negative externality. The government imposes a per-unit tax on automobiles to reduce the impact of this externality. With this tax, at the market quantity, the Marginal Social Benefit of the last automobile produced is lower than the Marginal Social Cost of the last automobile produced. This tax: Group of answer choices is too low to implement the efficient quantity. is too high to implement the efficient quantity. implements the efficient quantity because in the market equilibrium with the tax we have Marginal Private Benefit equal to Marginal Private Cost. Need information on Marginal Private Benefit and Marginal Private Cost at the market equilibrium with the tax to determine if the market outcome is efficient.
If production of a good is known to create external benefits a. Those benefits are larger than those received by the consumers of that good b. Those benefits are smaller than those received by the consumers of that good c. Those benefits are the same as those received by the consumers of that good
The price of good X is $7. But each unit of good X produces has an external cost of $1. What is the social cost of one unit of good X?