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

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Consider the supply of soybeans in South America and the demand for soybeans in China. Draw a graph in which you show the current market equilibrium price of soybeans and quantity of soybeans traded. Include the curve that shows the true social costs of soybean production. Show the socially optimal amount of soybeans traded. Show the price that should really be charged for soybeans to ensure that production moves to the socially optimal level. Ensure that you label your graph correctly (all curves, axes, prices and quantities labeled). Show the deadweight loss of soybean production. What intervention could be used to change the market price for soybeans to the level that would move the quantity of soybeans traded to the optimal level? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 35 For the questions assume that there is a $3 external COST. 1. Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the market is perfectly competitive and that "one allowance" lets you produce one unit of the good.) 2. What will they be worth if the quantity is capped at 500? 3. What if it is capped at 700?
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2, = 160,000 – 2000P and Qs=40,000+2000P, where Q, is the quantity demanded in 100-pound lots, Q, is the quantity supplied in 100-pound lots, and P is the price per 100-pound lot. Currently there is no attempt to regulate the 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 paper is given by the curve MEC=0.0006Qs- 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. b. Determine the socially efficient price and output of paper. c. Explain why the answers you calculated in parts a and b differ.
Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 35 For the questions assume that there is a $3 external COST. 1. Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the market is perfectly competitive and that "one allowance" lets you produce one unit of the good.) 2. What will they be worth if the quantity is capped at 500? 3. What if it is capped at 700?

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