Suppose 15 people each have the demand Q=220 - 40P for streetlights, and 10 people have the demand Q = 180 - 20P for streetlights. The cost of building each streetlight is $8. If it is impossible to purchase a fractional number of streetlights, how many streetlights are socially optimal?
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Q: *: * Suppose 15 people each have the demand Q = 220 – 40P for streetlights, and 10 people ve the…
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- Suppose 15 people each have the demand Q=220 - 40P for streetlights, and 10 people have the demand Q = 180 - 20P for streetlights. The cost of building each streetlight is $8. If it is impossible to purchase a fractional number of streetlights, how many streetlights are socially optimal?
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- Consider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of a good demanded grows in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $90 where the quantity demanded is 120 (thousand CD players per month). If the price of CD players falls to $50, demand will increase to 180 thousand CD players per month. (Enter your response using an integer.) Of this increase, price effect and thousand units of the 60 thousand-unit increase is the pure thousand units of the increase is the bandwagon effect. C Price 200- 180- 160- 140- 120+ 100- 80- 60- 40- 20- 0+ 0 Doo Demand 20 P150 D60 P120 180 40 60 80 100 120 140 160 180 200 220 CD Players (thousands per month)Two firms (A and B) run separate mining companies in the same forest. Both pollute the river flowing through the forest with debris. Currently, each company releases 50 pounds of debris per month into the river. The table below shows the costs associated with reducing debris in 10-pound increments. Total cost of reducing debris by 10 pounds Total cost of reducing debris by 20 pounds Total cost of reducing debris by 30 pounds Total cost of reducing debris by 40 pounds Total cost of reducing debris by 50 pounds Firm A Firm B $5 $2 $15 $6 $30 $12 $50 $20 $75 $303. Now reconsider the issue of soybeans from the perspective of Chinese consumers. Assume you are a Chinese consumer who drinks soymilk each day. Demonstrate using a graph how your consumption of soymilk differs from the socially optimal level. Is the price you pay for soymilk in current market conditions the correct amount, too high, or too low? Why? Ensure that you label your graph correctly (all curves, axes, price and quantities labeled). Show the deadweight loss of soymilk consumption, and what price should be charged for soymilk to move the amount of soymilk you drink to the optimal level.
- A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing. For the students of the college, the visual appearance of the campus is be classified as a public good. and The benefit of the beautification initiative, as suggested by the survey, is $ cost, the college administrators Suppose the college administrators estimate that the beautification initiative will cost $41,230. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 1,750 students, asking each of them their willingness to pay for the beautification project. The average willingness to pay, as revealed by the survey, is $18. Thus, the visual appearance would ▼ undertake the beautification initiative. Because the estimated benefit is than the The calculation of the benefit of the beautification initiative relied on the…An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is beneficial, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good. (?) PRICE (Dollars per unit) QUANTITY (Units) Supply Demand ¦ þ Demand SupplySuppose that you can purchase satellite TV service for a fixed monthly fee of $79, no matter how many hours of TV you watch. Assuming that the principle of diminishing marginal benefit applies to watching TV, the optimal (efficient) number of hours of TV to watch per month is: Group of answer choices Zero The number of hours where marginal benefits are zero. The number of hours where marginal cost is lowest. The number of hours where marginal benefits are maximized.
- An airport is located next to a banana farm. The airport can fly X planes per day, but the burning fuel will cause air pollution in the amount of Y per day, where Y can be any positive number. The total profits for the airport per day are given by 50X − X2 + (9 − 2Y ) 2 . The banana farm needs clean air to produce bananas, B, so the air pollution caused by the airport makes growing bananas more costly. The banana farm’s profit function is 20B − B2 − (5 + Y ) 2 . What is the socially optimal level of air pollution? (a) 7 (b) 9/2 (c) As much as possible (d) 23/3 (e) 4Assume your apartment complex decides to build new open access common area for its residents. Each individual has value for using the common area represented by the following value function: V= 40-0.5Q where Q represents the number of individuals using the common area. The marginal value function is: MV= 40-Q Assume each individual’s opportunity cost of time is $8 [e.g. MC=8] A) How many people use the common are at the social optimum? B) Calculate the net value (NV) at this social optimum. C) What characteristic of the good must be changed in order to avoid over use of the common area?A study finds that the noise from lawn mowers is harmful; hence, the government imposes a $20 tax on the sale of every lawn mower. This amount accurately accounts for the external cost of the noise pollution. Before the corrective tax, basic push mowers regularly sold for $190. After the tax is in place, the market price for basic push mowers rises to $195. The socially optimal price of basic push mowers is _____ $ .