Explanation Figure 1 shows demand for college education. In Figure 1, vertical axis measures the price and cost (dollar per student) and horizontal axis measures the quantity of student (thousands). The curve MSC is the marginal social curve. The downward sloping curve MSB is the marginal social benefit curve and D is the demand curve (marginal benefit). The equilibrium quantity is the quantity at the intersecting point of the demand curve and supply curve and corresponding price is the equilibrium price . Thus, 30,000 is the equilibrium quantity of student and 4000 is the tuition. The shaded triangle area in the figure is the deadweight loss . The calculation of deadweight loss is shown below: Deadweight loss = 1 2 [ MSC Equilibrium − Equilibrium price ] × [

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ISBN: 9780134744476

Author: Michael Parkin

Publisher: PEARSON

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Chapter 17, Problem 25APA

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Equilibrium quantity of student and tuition price.

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Chapter 17, Problem 24APA

Chapter 17, Problem 26APA

Chapter 17 Solutions

Microeconomics (13th Edition)

Ch. 17.1 - Prob. 1RQ Ch. 17.1 - Prob. 2RQ Ch. 17.2 - Prob. 1RQ Ch. 17.2 - Prob. 2RQ Ch. 17.2 - Prob. 3RQ Ch. 17.2 - Prob. 4RQ Ch. 17.3 - Prob. 1RQ Ch. 17.3 - Prob. 2RQ Ch. 17.3 - Prob. 3RQ Ch. 17.4 - Prob. 1RQ

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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.
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?

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