a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $40 per unit and theexternal cost at $20 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area.MPCMPB100Tools9080MSBMSC70605040302010369 1215 1821 24 27 30 33 36 39 42 45Quantity per periodb. What are the most desirable price and quantity from society's point of view?Price: $Quantity:c. If government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to producers per unit?Value of subsidy: $d. if, instead, government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to consumersper unit?Value of subsidy: $Price

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a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $40 per unit and the external cost at $20 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area. MPC

a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $40 per unit and the external cost at $20 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area. MPC

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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