• The demand for a good is QD = 160-2P with P being the price and QD denoting the quantity demanded. The supply for the good is Qs = -40 + 2P with Qs representing the quantity supplied. The production of the good creates a marginal external cost P = Q. • Q6. Determine the equilibrium quantity in the absence of any regulation. • Q7. Determine the consumer surplus in the absence of any regulation. • Q8. Determine the producer surplus in the absence of any regulation. • Q9. Determine the total external cost in the absence of any regulation. • Q10. Determine the efficient (or social) equilibrium quantity. • Q11. Determine the deadweight loss associated with the negative externality.
• The demand for a good is QD = 160-2P with P being the price and QD denoting the quantity demanded. The supply for the good is Qs = -40 + 2P with Qs representing the quantity supplied. The production of the good creates a marginal external cost P = Q. • Q6. Determine the equilibrium quantity in the absence of any regulation. • Q7. Determine the consumer surplus in the absence of any regulation. • Q8. Determine the producer surplus in the absence of any regulation. • Q9. Determine the total external cost in the absence of any regulation. • Q10. Determine the efficient (or social) equilibrium quantity. • Q11. Determine the deadweight loss associated with the negative externality.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Last 3. Parts are wrong please don't do like this i trust on you and you are giving me wrong answer PLz give me correct answer for last 3 parts plz

Transcribed Image Text:• The demand for a good is QD = 160-2P with P being the price and Qp
denoting the quantity demanded. The supply for the good is Qs = -40 +
2P with Qs representing the quantity supplied. The production of the good
creates a marginal external cost P = Q.
• Q6. Determine the equilibrium quantity in the absence of any regulation.
• Q7. Determine the consumer surplus in the absence of any regulation.
Q8. Determine the producer surplus in the absence of any regulation.
• Q9. Determine the total external cost in the absence of any regulation.
Q10. Determine the efficient (or social) equilibrium quantity.
Q11. Determine the deadweight loss associated with the negative
externality.
●
31

Transcribed Image Text:Given:
Demand: Q=160-2P
Supply: Q=-40 +2P
External Cost: P = Q
Part A
Without regularization, the market equilibrium
condition is:
=> Demand = Supply
=> 160-2P = -40 +2P
=>4P=200
=> P = 50
From the demand curve : Q=160-2P=160-2*50=
160-100=60 (equilibrium quantity) - it is
corresponding to point A in the diagram below
Part B
without regulation, Consumer surplus is given by
the area ABC
= (1/2)*60*(160-50) = 3300 (ans.)
Part C
Without regulation, the producer surplus is given
as:
= (1/2)*60 (50-20) = 900 (ans.)
Price
160 B
50
20 P
Solution
Part A: 60
Part B: 3300
Part C: 900
A
X
60
$1
D1
Quantity
Part D
As the equilibrium output without government
regulation is 60 units
And as the total external cost: P = Q = 60
Hence total external cost in the absence of any
regulation is 60
Part E
To get the efficient equilibrium quantity, we have:
MSC (marginal social cost) = MB (marginal
benefits)
MSC MPC + MEC
MPC: Marginal private cost given by the S1 curve
MEC: P = Q
=>MSC = (20 +0.5Q)+Q=20+1.5Q
MB: this is given by the demand curve,
=> Hence equilibrium with regulation is:
= 20 + 1.5Q = 80 - 0.5Q
=>2Q=60
=>Q=30 units (efficient equilibrium quantity)
From the demand function:
>P=80-0.5Q=80-0.5*30=65
Part F
In the graph we have the MSC curve. And this line
intersects the demand curve at point B where we
have equilibrium price as 65 and equilibrium
quantity as 30 units (this is derived in part E)
Corresponding to Q = 30 units, MPC = 20 +0.5Q =
20+0.5*30=35
The dead weight loss is given by the area:
= (1/2)*(60-30)*(65-35)
= 450 (ans.)
Price
100
65
50 C
35
20 D
MSC
$1
DI
Quantity
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON

Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning

Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education