Given the following functions for shoe factory in Ohio: fi: Qa=2(90 - P) : P = 4Qs Where Q is quantity and P is price. f2 given is the Marginal Cost for the shoe factory but this producer often dumps left over materials such as glues and dyes directly into the sewer effecting ground water in the nearby town. An expert in the field discovered that the marginal damage is a constant $9. 1. What is the social marginal cost (show all working)? 2. What is the new equilibrium when pollution damage is taken into consideration for this market? 3. What is the total surplus when accounting for the damages? (Evaluate at the SMC level) - Draw the diagram and label.
Given the following functions for shoe factory in Ohio: fi: Qa=2(90 - P) : P = 4Qs Where Q is quantity and P is price. f2 given is the Marginal Cost for the shoe factory but this producer often dumps left over materials such as glues and dyes directly into the sewer effecting ground water in the nearby town. An expert in the field discovered that the marginal damage is a constant $9. 1. What is the social marginal cost (show all working)? 2. What is the new equilibrium when pollution damage is taken into consideration for this market? 3. What is the total surplus when accounting for the damages? (Evaluate at the SMC level) - Draw the diagram and label.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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