a. What is the market price (market value) of the product? 8 per unit b. What is the market output? unit(s) Assume that the product depicted above generates external costs in consumption of $4 per unit. c. What is the socially optimal output? unit(s) d. By how much does the market overproduce this good? 5.5 unit(s)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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a. What is the market price (market value) of the product?
8 per unit
b. What is the market output?
unit(s)
Assume that the product depicted above generates external costs in consumption of $4 per unit.
c. What is the socially optimal output?
unit(s)
d. By how much does the market overproduce this good?
5.5 unit(s)
Transcribed Image Text:a. What is the market price (market value) of the product? 8 per unit b. What is the market output? unit(s) Assume that the product depicted above generates external costs in consumption of $4 per unit. c. What is the socially optimal output? unit(s) d. By how much does the market overproduce this good? 5.5 unit(s)
15
14
Market supply
13
12
11
10
8
7
5
4
3
Market demand
2
1
1 2 3 4 5 6 7 8 9 1011 12 13 14 15
Quantity (units per time period)
Price (per unit)
Transcribed Image Text:15 14 Market supply 13 12 11 10 8 7 5 4 3 Market demand 2 1 1 2 3 4 5 6 7 8 9 1011 12 13 14 15 Quantity (units per time period) Price (per unit)
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