The efficient level of paper production is more likely to occur A) in a market with positive externalities B) in a market with negative externalities C) in a market with a market failure D) in a market without externalities
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- A steel mill, S, produces 20 tons of water pollution for every 100 tons of steel it produces. The downstream village of Watertown (WT) spends $150 per ton of water pollution from S to eliminate itsenvironmental harm. S is a price taker in an international market where the demand for steel is p = 100 – 3X and the market supply of steel is p = 40 + 3X. X is in units of one (1) million tons per day and p is the price in dollars per ton of steel. S has a daily increasing marginal cost of production function, MC = x.S's Total Cost function = x*x/2 where x is S’s daily output.(a) If S has no legal liability for its pollution, what is S’s daily production of steel?How does your answer here relate to the concept of private efficiency?(b) WT wants to bargain with S to reach an optimal agreement on this pollution. Assuming S is still not legally liable for its pollution and both S and WT do not use lawyers, would there be an agreement? How does your answer here relate the concept of private…Suppose Firm A is the anly producer in some market. You are given information about the market demand and marginal cost for Firm As product Firm A's market demand is given by: Q= 60 - P Firm A's marginal cost is given by: MC = 6+Q A) Calculate the profit-maximizing output for Firm A. B) Calculate the profit-maximizing price for Firm A. Calculate what would have been the socially efficient output level produced in this market.Only typed answer and please don't use chatgpt The inverse demand for leather is given by P = 50-0.5Q. The industry supply of leather is determined by its marginal cost: MC = 0.4Q. Unfortunately, the production of leather causes noxious chemical residue to leach into groundwater supplies. The external marginal cost caused by these residues grows with the amount of output, and is measured as EMC = 0.05Q. 1A. How many leather is produced in the free market if the externality is not corrected. B) What is the free market price of the leather if the externality is not corrected? C) What is the social marginal cost?
- The market for plasticans is perfectly competitive. Market Supply is givenby Q=8P and Market Demand is given by Q=417-3P. Each extra unit ofplastican produced imposes a negative externality of $7. What is theefficient quantity? Efficient quantity is determined by setting Marginal Social Costs(=Marg. Pvt. Cost + Marg. External Cost.) equal to Marg. SocialCost=MWTP which is captured by the Demand curve.The market for plasticans is perfectly competitive. Market Supply is givenby Q=4P and Market Demand is given by Q=368-2P. Each extra unit ofplastican produced creates a positive externality of $5. What is theefficient quantity? Efficient quantity is determined by setting Marginal Social Costs(=Marg. Pvt. Cost + Marg. External Cost.) equal to Marg. SocialCost=MWTP which is captured by the Demand curveSuppose that a chemical manufacturing plant is releasing nitrogen oxides into the air, and these emissions are associated with health and ecological damages. Economists have estimated the following marginal costs and benefits for the chemical market, where Q is monthly output in thousands of pounds and P is price per pound. MSB = 50 – 0.4Q MSC = 2 + 0.4Q MEB = 0 MEC = 0.2Q. Find the efficient equilibrium, QE and PE.
- Price and cost (thousands of dollars per student) 20 S = MC 16 12 MSB 8 MB 4 200 400 600 800 1,000 Quantity (students per year) The figure above shows the market for private elementary school education in Chicago. There is no external cost of private elementary education. If the government does not intervene in this market, the equilibrium number of students being privately educated is and the efficient quantity is A) 400 students; 400 students B) 600 students; 400 students C) 600 students; 600 students D) O students; 400 students E) 400 students; 600 studentsCompared to a good with no externalities, a good with a negative externality at each corresponding price. will appear to have experienced a Olncrease in Supply ODecrease in Supply Olncrease in Demand ODecrease in DemandA power plant releases an unpleasant odor into the local environment. This market is perfectly competitive, and the plant does not consider the damages imposed on local citizens in terms of lower air quality. The market can be characterized by the following equations: MPB = 800 - 0.5Q MPC = 80 + 0.3Q MEC = 0.4 Q a) Find the competitive equilibrium price and quantity, Qc and Pc. b) Find the socially optimal (or efficient) price and quantity, Qe and Pe. c) Provide a geographical depiction of the competitive and socially optimal solutions. Make sure you label the graph focusing on the following items: units of each axis, labels of curves (MPC, MPB, MSB, MSC), competitive equilibrium price and quantity, and socially optimal price and quantity. d) Analytically derive the social welfare gains from internalizing the externality AND illustrate this welfare gain on the figure you created in part (c). e) Suppose the plant owns the property rights to local air and it is…
- Consider the profit getting from selling x and y units of two commodities isgiven by as follows: i. P(x, y) = −0.1x2 - 0.2xy - 0.2y2 + 47x + 48y - 600. Find out theproduction levels for x and y that maximizes the profit. ii. Now assume that the total production is limited to 200 units. Find out theproduction levels that maximizes the profits.Price GF E D 0 A) 0. BA OB) G. OC) D. OD) F. Quantity с S In the graph, line S is the current supply of this product, while line S, is the optimal supply from the society's perspective. If government corrects this externality problem and shifts production to the socially optimal level, then the product price will be equal to Dconsider the following graph of the marginal benefits (MB) and marginal costs (MC) of producing paper. (This is not a question about externalities). Assume fixed costs are zero. Also, these aren't damages and abatement costs. $ MC MB° h f b d a Раper Suppose the firm produced at qa. Which area best represents the inefficiency associated with this level of production? o a. {e} P {f} OC {f-b} Od {e+c}
