Consider the provision of a playground. Themarginal benefit for consumer 1 is given by MB =30 – 2qand the marginal benefit for consumer 2 isgiven by MB = 20 – ½ q. If the marginal cost ofprovision is $5per unit, what is the socially optimallevel of the playground?*a. 30 unitsb.18 unitsc.0 unitsd.10 unitse.None of the other answers is correct.

here we calculate the socially optimal level of the playground and choose the correct option so the…

Consider the provision of a playground. The marginal benefit for consumer 1 is given by MB = 30 – 2qand the marginal benefit for consumer 2 is given by MB = 20 – ½ q. If the marginal cost of %3D provision is $5per unit, what is the socially optimal level of the playground?

Consider the provision of a playground. The marginal benefit for consumer 1 is given by MB = 30 – 2qand the marginal benefit for consumer 2 is given by MB = 20 – ½ q. If the marginal cost of %3D provision is $5per unit, what is the socially optimal level of the playground?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The equations below represent the demand and supply curves for annual gym memberships in a city. qD= 500 − 2p, qS=0.5p − 50 Because physical activity leads to better health, the city estimates that each annual gym membership saves $30 of public spending on healthcare per year (a positive externality). a. In a graph, show the market and the socially optimal equilibria for annual gym memberships in this city. Does the market equilibrium result in under- or over-consumption of memberships? What is the deadweight loss associated with the market failure in this situation? b. Would you recommend this city to implement a subsidy (a negative Pigouvian tax) to correct this market failure? If so, how much would be the subsidy per unit? What would be the effects of your proposed policy on the quantity, price, and aggregate welfare?
Please label the graph point where the socially optimal equilibrium is
No hand written solution Afirm has an industrial plant that emits pollutants into a town’s lake. The plant’s marginal abatement function is MAC= 200 – 0.5E and damages caused by its emissions are given by MD = 2E where emissions are in kg. per day. What is the socially efficient level of emissions from this plant? Illustrate this in a graph. As an incentive to reduce emissions to the socially efficient level, government offers to pay the firm for each kg. of emissions it abates per day from this plant. What subsidy per kg. should the government offer? If the plant abates to the socially efficient level of emissions, what total subsidy payment would the firm receive? Identify the area in your graph. How much better or worse off would the firm be compared to if it did no abating? Identify the area in your graph. What would be the net benefit to society if we pay the firm to reduce the plant’s emissions to the socially efficient level? Identify this area in your graph.
D. What is Total Cost E. What is profit F. What is Socially optimum output
Is the answer A B C or D?
The public smoking of cigarettes generates costs to society from second-hand smoke, therefore, cigarette production imposes costs on people who do not smoke. Moreover, private consumption of cigarettes can start apartment building and wild fires that also impose costs on non-smokers. Luckily, fire extinguishers can help prevent the spread of fires.
Please, Provide an Explanation for the Ranges/Point in the Follow (Encircled Below in Red. What Do the Ranges/Point Refer To & H They Calculated?) With Z representing the Level of Mitigation (Z): Marshland, MB = 3-Z Dampland, MB=4-2Z Wetland, MB 11-Z The Marginal Cost of Flood Mitigation (MC): MC=2+12Z a. What is the Socially Optimal Level of Z(Zopt)? Answer: From 0-2 MSB = [(3- Z)+(4- 2Z) + (11- Z)] = [(3+ 4+ 11)-(Z+2Z+Z)] = 18-4Z From 2-3 MSB=(3- Z) + (11- Z) = [(3 + 11)-(Z+Z)] = 14-2Z From 3-10-MSB = 11 - Z @11MSB=0
Use the diagram below to answer the next three questions. What price and quantity will the firm in the diagram above produce? what's the socially optimal price and quantity?
10
The production of fabric generates toxic effluents related to the dyes used. This is typically disposed of with wastewater, which generates pollution. If the government does not intervene, the market for fabric has an equilibrium price of $250 per roll and an equilibrium quantity of 10,000 rolls. a.How would the socially optimal quantity of fabric compare to the free market equilibrium quantity of 10,000 rolls? Why? b. Using a supply and demand graph show the effect on social welfare of allowing the market for fabric to operate without government intervention. Label all the curves and relevant points on your graph. c. Would a government subsidy or tax help the market achieve the social optimum? Explain. Show the necessary subsidy/tax on your graph. d. Explain how this intervention helps achieve the social optimum and what information would be necessary to implement it.
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.
If a paper manufacturer does not bear the entire cost of the dioxin it emits, it will Select one: emit a lower level of dioxin than is socially efficient. b. emit an acceptable level of dioxin. emit a higher level of dioxin than is socially efficient. a. C. O d. not emit any dioxin in an attempt to avoid paying the entire cost.