P(Q) (or MSB) = 50 - 0.5Q Р() (MPC) %3 25 + 0.5Q MEC = 0.5Q %3D Pc (Competitive Equilibrium Price) = 37.50 Ос (Соmpetitive Equilibrium Quantity) %3D 25 Pe (Efficient Equilibrium Price) = 41.67 Qe (Efficient Equilibrium Quantity) = 16.66 1) Sketch the curves for these functions and illustrate the competitive equilibrium and label Pc and Qc and efficient equilibrium (labelling Pe and QE). 2) On the diagram from part 1, illustrate the areas that correspond to the loss in profit for the firm, the total gain to society and the net gain to society when comparing the competitive equilibrium to the efficient equilibrium

P(Q) (or MSB) = 50 - 0.5Q Р() (MPC) %3 25 + 0.5Q MEC = 0.5Q %3D Pc (Competitive Equilibrium Price) = 37.50 Ос (Соmpetitive Equilibrium Quantity) %3D 25 Pe (Efficient Equilibrium Price) = 41.67 Qe (Efficient Equilibrium Quantity) = 16.66 1) Sketch the curves for these functions and illustrate the competitive equilibrium and label Pc and Qc and efficient equilibrium (labelling Pe and QE). 2) On the diagram from part 1, illustrate the areas that correspond to the loss in profit for the firm, the total gain to society and the net gain to society when comparing the competitive equilibrium to the efficient equilibrium

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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