10) There are three groups in a community. Their demand curves for public television in hours of programming, T, are given respectively by W₁ = $200-T, W₂=$240-27, W3 = $320 - 27. Suppose public television is a pure public good that can be produced at a constant marginal cost of $200 per hour. a. What is the efficient number of hours of public television? Willingness to Pay Hours Vertical Group 1 (W₁) (7) Sum 100 100 120 260 106 94 108 230 112 88 96 200 118 82 4 84 170 b. How much public television would a competitive private market provide? Group 2 Group 3 (W₂) (W3) 40 28 16

10) There are three groups in a community. Their demand curves for public television in hours of programming, T, are given respectively by W₁ = $200-T, W₂=$240-27, W3 = $320 - 27. Suppose public television is a pure public good that can be produced at a constant marginal cost of $200 per hour. a. What is the efficient number of hours of public television? Willingness to Pay Hours Vertical Group 1 (W₁) (7) Sum 100 100 120 260 106 94 108 230 112 88 96 200 118 82 4 84 170 b. How much public television would a competitive private market provide? Group 2 Group 3 (W₂) (W3) 40 28 16

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. Suppose the supply curve of portable radio rentals in Golden Gate Park is given by P= 5+ 0.1Q and the demand curve is by P = 20 -0.2Q. a. If each portable radio imposes $3 per day in noise costs on others, by how much will the market equilibrium quantity exceed the socially optimal number of rentals? b. How would the imposition of a $3 per unit tax affect the efficiency in this market?
When equilibrium output in a competitive market is at the socially efficient level: a) only market values are incorporated into marginal benefits to consumers and marginal costs of production. b) net social value is as large as possible. c) the marginal benefit to consumers may exceed or be less than the marginal cost of production. d) total willingness to pay is as large as possible.
Match the following with: overproduced, efficiency, underproduced, deadweight lost. 1) A negative externality leads to ________. 2) A public good tends to be ________. 3) Reducing pollution leads to ________.
2. Refer to Graph 10-1. Assume the externality is not internalised. What is the loss to society from the last unit of the good produced by the market? A. P3-P2 B. P2-P1 C. P3-P1 D. ZeroGraph 10-1 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.
2. Table: The following table shows the private value, private cost, and social value for a market with a positive externality. Quantity Private Value Private Cost Social Value 27 6 34 12 24 10 31 13 21 14 28 14 18 18 25 15 15 22 22 12 26 19 a. What is the market equilibrium quantity of output for this product? b. What is the socially-optimal level of output in this market? c. How large would a per unit subsidy need to be in this market to move the market from the equilibrium level of output to the socially-optimal level of output?
1.) Consider the market for plastic grocery store bags. Suppose that demand for these bags is given by PD = 24 – QD and supply is given by PS = QS. These bags, after they are used, pile up in the streets and get stuck in trees, creating unattractive litter. This litter imposes a negative externality of $2 per plastic bag. a.) Compute the socially optimal quantity of plastic bags. b.) Compute the competitive equilibrium in the market for plastic bags. c.) Compute consumer surplus, producer surplus, and total surplus in the market for plastic bags in this competitive equilibrium.
2) The following table shows how the marginal benefit of a service varies for five consumers. Quantity 1 4 Serkan 150 125 100 75 Asuman 125 100 75 50 Bahar 100 75 50 25 Murat 200 150 125 125 Meriç 600 400 200 150 a) Derive the demand curve for this service assuming that it is a public good. b) If marginal cost of the good is 850, what is the efficient output of the public good? c) If marginal cost of the good is 425, what is the efficient output of the public good? d) If marginal cost of the good is 850, what is the efficient output assuming it is private good?