Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 11, Problem 7SPPA
To determine
(a)
To compute:
The
To determine
(b)
To explain:
Whether efficient equilibrium isoverfishing equilibrium same or not.
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1. The supply of paper is described by Qs=5000P where Qs is tons supplied per year and P is the price per ton. The demand is described by Qd=400,000-1000P where Qd is tons demanded per year. Because of the pollution associated with paper production, marginal external costs of $20 are associated with each ton of paper.
a. Assuming that paper is sold in a competitive market with no regulation, what is the market price and quantity produced?
b. Show and explain how can a corrective tax achieve efficiency?
c. Assume a tax of $40 per ton is proposed. Would the proposed tax improve market efficiency (reduce deadweight loss)? Show and explain.
The many identical residents of Whoville love drinking Zlurp.each resident has the following willingness to pay for the tasty refreshment:
a.The cost of producing Zlurp is $150,and the competitive suppliers sell it at this price.The supply curve is horizontal .How many bottles will each whovillian consume?What is each person's consumer surplus?
b.Producing Zlurp creates pollution.each bottle has an external cost of $1.Taking this additional cost into account,what is total surplus per person in the allocation you described in part(a).
c.Cindy Lou Who,one of the residents of Whoville,decides on her own to reduce her consumption of Zlurp by one bottle.what happens to the Cindy's welfare (her consumer surplus minus the cost of pollution she experiences)?How does Cindy's decision affect total surplus in Whoville?
d.Mayor Crinch imposes a $1 tax on Zlurp.What is consumption per person now?Calculate consumer surplus,the external cost ,the government revenue,and total surplus per person.…
On the attached graph:
1. Illustrate the marginal social benefit curve
2. Illustrate the area of deadweight loss
3. Identify the market Q and the socially optimal Q
Chapter 11 Solutions
Foundations of Economics (8th Edition)
Ch. 11 - Prob. 1SPPACh. 11 - Prob. 2SPPACh. 11 - Prob. 3SPPACh. 11 - Prob. 4SPPACh. 11 - Prob. 5SPPACh. 11 - Prob. 6SPPACh. 11 - Prob. 7SPPACh. 11 - Prob. 8SPPACh. 11 - Prob. 9SPPACh. 11 - Prob. 10SPPA
Ch. 11 - Prob. 1IAPACh. 11 - Prob. 2IAPACh. 11 - Prob. 3IAPACh. 11 - Prob. 4IAPACh. 11 - Prob. 5IAPACh. 11 - Prob. 6IAPACh. 11 - Prob. 7IAPACh. 11 - Prob. 8IAPACh. 11 - Prob. 9IAPACh. 11 - Prob. 1MCQCh. 11 - Prob. 2MCQCh. 11 - Prob. 3MCQCh. 11 - Prob. 4MCQCh. 11 - A renewable common resource is used sustainably if...Ch. 11 - Prob. 6MCQCh. 11 - Prob. 7MCQCh. 11 - When ITQs are assigned, the market price of an ITQ...
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