MICROECONOMICS(LL)COMPANION
21st Edition
ISBN: 9781260713541
Author: McConnell
Publisher: MCG
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Question
Chapter 4, Problem 5P
Subpart (a):
To determine
The market demand for public and private goods.
Subpart (b):
To determine
The market demand for public and private goods.
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1.
Chapter 4
Market Failure Caused by Externalities
Page
94 Problem 1
Draw a supply and demand graph and
identify the areas of consumer surplus and
producer surplus. Given the demand curve,
how will an increase in supply affect the
amount of surplus shown in your diagram ?
Explain. LO4.1 (Differentiate between
demand-side market failures and supply-side
market failures.
The many identical residents of some cities love drinking apple juice. The cost of producing a
bottle of apple juice is $5, and the competitive suppliers sell it at this price. Each resident has
the following willingness to pay for the tasty refreshment:
Quantity
Willingness to Pay
(Dollars)
First bottle
10
Second bottle
8
Third bottle
6.
Fourth bottle
4
Fifth bottle
2
Further bottles
PRICE (Dollars per unit of electric cars)
500
450
400
350
300
250
200
150
100
50
0
H
0
O
□
1
0
■
The market equilibrium quantity is
O
3
5
QUANTITY (Units of electric cars)
☐ Supply
(Private Cost)
6
Demand
(Private Value)
Social Cost
units of electric cars, but the socially optimal quantity of electric car production is
To create an incentive for the firm to produce the socially optimal quantity of electric cars, the government could impose a
per unit of electric cars.
units.
of 1
Chapter 4 Solutions
MICROECONOMICS(LL)COMPANION
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
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