Suppose that supply and demand for vaccines can be representedby P = 100 + 3Q and P = 500-Q, respectively. Further, assume that each vaccination isassociated with a positive externality, with an estimated value of 100 monetary units.a.What is the competitive equilibrium in this market?Q = 100 and P = 400O Q = 125 and P = 375Q 125 and P = 475Q = 75 and P = 425None of the othersCalculatorRegarding the socially efficient outcome, which of the following is correct?MCSocialQOpt = 125 since this is the value for which MB SocialQOpt = 125 and the total value of the externality is 100O QOpt = 100 since the deadweight loss is equal to 0O QOpt=75 and the total value of the externality is 7500None of the othersb. C.Which of the following measures could be implemented in order to correct theproblem caused by the externality?A (Pigou) tax equal to the value of the externalityA (Pigou) subsidy equal to the competitive market priceA maximum price above the competitive market priceA minimum price equal to the value of the externalityNone of the others

Competitive equilibrium In a competitive market with freely determined prices, competitive…

Suppose that supply and demand for vaccines can be represented by P = 100+305 and P = 500-Q, respectively. Further, assume that each vaccination is associated with a positive externality, with an estimated value of 100 monetary units. a. What is the competitive equilibrium in this market? OQ = 100 and P = 400 Q125 and P 375 Q=125 and P = 475 OQ = 75 and P = 425 None of the others Calculator b. Regarding the socially efficient outcome, which of the following is correct? Qºpt = 125 since this is the value for which MB Social = MC Social OQOpt 125 and the total value of the externality is 100 O QOpt = 100 since the deadweight loss is equal to 0 OQOpt75 and the total value of the externality is 7500 O None of the others

Suppose that supply and demand for vaccines can be represented by P = 100+305 and P = 500-Q, respectively. Further, assume that each vaccination is associated with a positive externality, with an estimated value of 100 monetary units. a. What is the competitive equilibrium in this market? OQ = 100 and P = 400 Q125 and P 375 Q=125 and P = 475 OQ = 75 and P = 425 None of the others Calculator b. Regarding the socially efficient outcome, which of the following is correct? Qºpt = 125 since this is the value for which MB Social = MC Social OQOpt 125 and the total value of the externality is 100 O QOpt = 100 since the deadweight loss is equal to 0 OQOpt75 and the total value of the externality is 7500 O None of the others

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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