Answered: Finding an Efficient Solution, Supply:…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A chemical company can produce Q units of a chemical H, with marginal costs of MC = 9 + Q, and can distribute the chemical at marketing marginal costs of MC = 1. The demand for H is given by P = 30 - 1.5Q. If an external market exists where H can be bought or sold without marketing expenses for $13, how much H should the firm produce? 4 units 10 units 7 units 5 units 0 units
MB = 50 - 2A MC = A Draw a graph for conducting a benefit cost analysis using marginal analysis. Solve for the efficient level of abatement and calculate the net benefits. Solve for the deadweight loss present at A = 10.
Price $400 $320 $120 $2000 $3000 $4000 300 350 $6000 Marginal Social Cost Supply = MPC What is the dead weight loss at the market outcome? Demand = MB -MEC = $120 Thousands of Board Feet
A positive externality arises when a third party, outside the market transaction, fails to allocate resources efficiently Pays less for the good or service benefits from a market transaction pays a pollution tax to balance social costs
The market for plasticans is perfectly competitive. Market Supply is givenby Q=7P and Market Demand is given by Q=455-2P. Each extra unit ofplastican produced imposes a negative externality of $8. Implement theoptimal Pigouvian tax/subsidy that implements the efficient outcome.
The inefficiency created by a negative production externality can be overcome if the government subsidizes production of the good. Select one: True False
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3. A steel producing firm has a demand fianction given as P = 30 - Q. the cost function facing the firm is given as and C = 200+ Q2. This firm emit its waste into a river and it cost the fish farmers C = 20 + 2.5Q2 to clean the river.Required i) Market Competition equilibrium price and quantity ii) Socially efficient equilibrium price and quantity iii) Amount of Corrective [Pigovian] tax per unit
Consider a competitive equilibrium with positive production externalities. In this econ- omy output will, (a) be equal to its Pareto optimal value. (b) exceed its Pareto optimal value. (c) be below its Pareto optimal value. (d) be where MRS.c = M RTL.c.
In the presence of external costs, untaxed or unregulated production is said to be.......................with a price that is................. a)too high; too high b) too high; too low c) too low; too high d) too low; too low
Which of the following policies aimed at reducing sulfur pollution would create an incentive for firms to find new innovative ways to reduce sulfur emissions? (Select all that apply) A requirement that all firms use a scrubber that removes sulfur from the smoke stack Marketable permits for sulfur emissions A sulfur pollution charge A requirement that all firms use a certain type of fuel
Suppose demand is QD=9−P and supply is QS=P. There is a constant positive externality of $4 per unit (marginal external benefit, MEB = $4). Find the market equilibrium quantity and the socially optimal quantity. The market equilibrium quantity is enter your response here. (Round your answer to one decimal place.) The socially optimal quantity is enter your response here. (Round your answer to one decimal place.)

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Finding an Efficient Solution, Supply: P = 10.0 + 0.1Q; Demand: P = 50.0 − 0.125Q. Let Marginal External Cost (MEC) = 0.05Q. Solve for Q and P