The market for paper in a particular region in the United Statess characterized by the following demand and supply curves:Qp = 145,000 – 2,000PandQs = 50,000 + 2,000Pwhere Qp is the quantity demanded in 100-pound lots, Qs is the quantity supplied in 100-pound lots, and P is the price per 100-pound lot. Currently there is no attempt to regulatethe dumping of effluent into streams and rivers by the paper mills. As a result, dumping is widespread. The marginal external cost (MEC) associated with the production of paperis given by the curveMEC= 0.0006Q5-a. Calculate the output and price of paper if it is produced under competitive conditions and no attempt is made to monitor or regulate the dumping of effluent. (Enter yourresponses rounded to two decimal places.)Without regulation, the price is $O per 100-pound lot, and the quantity is100-pound lots

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Answered: The market for paper in a particular…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How will the imposition of Pigovian taxes impact consumer surplus, producer surplus, and total surplus as it relates to marine pollution?
Suppose the market demand function for newspapers is given by QD=90-3P. In the production of newspaper, several chemicals are released into the atmosphere. The supply function for newspapers is given by QS=2P-30-T, where T represents the external cost created in the production process for newspapers. a. Find the equilibrium price and quantity that would emerge in the private market for newspaper. (HINT: Set T=0) b. An economic consulting firm has determined that the external cost created by the chemicals released during newspaper production is $5 per unit. Find the socially optimal price and quantity of newspapers. (HINT: Set T=5) c. Calculate what the total surplus would be at the private market price and quantity. d. Calculate what the total surplus would be at the socially optimal price and quantity.
Table 10-1 Quantity Private Value Private Cost External Cost (Units) (Dollars) (Dollars) (Dollars) 1 14 10 2 2 13 11 2 3 12 12 2 4 11 13 2 5 10 14 2 6 9 15 2 7 8 16 2 Refer to Table 10-1. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome? $2 00 $3 $9 ○ $10
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The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below. Price Quantity Demanded Quantity Supplied without Paying Social Costs Quantity Supplied after Paying Social Costs 100 0 120 75 80 10 100 50 55 30 90 30 40 55 85 25 30 80 80 20 20 100 65 15 The equilibrium price and quantity when social costs are taken into account are Question 12 options: Price = $55, Quantity = 30 Price = $40, Quantity = 55 Price = $30, Quantity = 20 Price = $30, Quantity = 80
The market for plasticans is perfectly competitive. Market Supply is given by Q=8P and Market Demand is given by Q=342-2P. Each extra unit of plastican produced imposes a negative externality of $9. What is the (absolute value of) Deadweight Loss due to the externality? Enter a number only, drop the $ sign. Do NOT include a negative sign. 48.6
You have the following supply and demand curves for an industry: QSX = -100 + 3 * PX for PX >= $40 QDX = 300 – 2 * PX However, this industry causes pollution damage to third parties. Each quantity produced creates pollution that causes equal damage, such that the marginal external cost is a constant $20 per unit (MEC= $20). a) Calculate the price quantity combinations for both the perfectly competitive and the efficient solution. Graphically show both solutions as well. Make sure you label all curves and axes. b) What efficient tax would move the competitive market to the efficient solution?
Which of these is a negative production externality? An airline manufacturer must hold up production of a plane at great cost due to delays in its global supply chain. A cereal manufacturer suffers losses due to a drought and unexpected increases in market prices of grains that it uses in its cereals. O Consumers complain to the wrong regulators about price gouging in gasoline markets. A producer of lead for batteries that are used nationwide emits noxious gases in its factory town and local people are getting sick. Thch Save
University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs. If there are no subsidies, what is the relationship between the equilibrium quantity of university research and the optimal quantity of university research produced? O The equilibrium quantity is greater than the socially optimal quantity O There is not enough information to answer this question O The equilibrium quantity is less than the socially optimal quantity O They are equal
List and describe two supply-side policies that could be instituted to encourage more sustainable forestry.
Question 15 ( Price per pound $100 90 80 70 60 50 40 30 20 10 Demand MSB MSC 2 3 Supply = MPC T T 4 5 6 7 8 9 10 Number of pounds (in thousands) Q = 5000, P = $40 Q = 3000, P = $40 Q = 5000, P = $60 Q=3000, P= $60 Bluefin tuna is a fish that is in high demand from consumers. Overfishing of this species, particularly in the Mediterranean Sea, has led to the strong possibility of extinction. The graph illustrates the marginal social cost (MSC), marginal private cost (MPC), and marginal social benefit (MSB) for a hypothetical representation of the Bluefin tuna market. Use the graph to answer the questions. What is the socially optimal price and quantity?

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