The local government has decided that because children's health has large external benefits, it will offer a subsidy to help families payfor visits to the pediatrician. However, the government isn't sure at what level to set the subsidy. The figure below shows the currentdemand curve for pediatrician visits (MBprivate) and three alternative subsidies, represented by curves Dsubsidy = $30, Dsubsidy =$60, and Dsubsidy = $90.Price$240$220$200$180$160$140$120$100$80$60$40$2005000 150200(200, 210) S=MCpvt-MC social250300350400Quantity of pediatrician visits450Dsubsidy=$90Dsubsidy=$60Dsubsidy=$30MBprivate500ToolsDWL90DWL 30a. Assume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is:b. Compared to the efficient outcome, graph the deadweight loss that would result from subsidies of $30 or $90.Instructions: Use the tools provided 'DWL30' and 'DWL90' to illustrate the deadweight loss for each subsidy. Drag the points to moveor resize.visits.

demand curve for pediatrician Visits (MBprivate) and three alternative subsidies, represented by curv $60, and Dsubsidy = $90. Price $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 0 50 150 200 (200,210) S-MCpvt MC social 300 350 400 Quantity of pediatrician visits Dsubsidy=$90 Dsubsidy=$60 Dsubsidy=$30 MB private 450 500 Tools DWL90 DWL-30 Dsubsidy = $30, Dsubsidy = a. Assume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is: b. Compared to the efficient outcome, graph the deadweight loss that would result from subsidies of $30 or $90. Instructions: Use the tools provided 'DWL30' and 'DWL90' to illustrate the deadweight loss for each subsidy. Drag the points to move or resize. visits.

demand curve for pediatrician Visits (MBprivate) and three alternative subsidies, represented by curv $60, and Dsubsidy = $90. Price $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 0 50 150 200 (200,210) S-MCpvt MC social 300 350 400 Quantity of pediatrician visits Dsubsidy=$90 Dsubsidy=$60 Dsubsidy=$30 MB private 450 500 Tools DWL90 DWL-30 Dsubsidy = $30, Dsubsidy = a. Assume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is: b. Compared to the efficient outcome, graph the deadweight loss that would result from subsidies of $30 or $90. Instructions: Use the tools provided 'DWL30' and 'DWL90' to illustrate the deadweight loss for each subsidy. Drag the points to move or resize. visits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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