ABC limited faces Marginal cost function given by MC=0.2Q and it faces a perfectly competitive price of shs. 40 for its output. Calculate the ABC competitive output levelGiven that ABC is exerting a negative externality and its socil marginal cost of production is estimated to be MC= 0.4Q, if the market price remai the same at shs. 40. Calculate the socially optmal level of production for ABCif the government imposes an excersice tax to bring about optimal level of production, calculate the level of tax to be imposed and total tax revenue the government is expected to rise

1. At equilibrium, price is equal to marginal cost. Calculate competitive output level as : P= MC…

Answered: Calculate the ABC competitive output…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ABC limited faces Marginal cost function given by MC=0.2Q and it faces a perfectly competitive price of shs. 40 for its output.

Calculate the ABC competitive output level
Given that ABC is exerting a negative externality and its socil marginal cost of production is estimated to be MC= 0.4Q, if the market price remai the same at shs. 40. Calculate the socially optmal level of production for ABC
if the government imposes an excersice tax to bring about optimal level of production, calculate the level of tax to be imposed and total tax revenue the government is expected to rise

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