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 inverse demand for leather is given by P = 50-0.5Q. The industry supply of leather...
1. 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 casues 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. (Graph the inverse demand curve, private marginal cost, and social marginal cost curves.) 1a) How many leather...
1. 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 casues 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. (Graph the inverse demand curve, private marginal cost, and social marginal cost curves.) 1a) How many leather...
An industry faces an inverse demand curve given by: P = 90 - 1.5Q. Let MC = 0.5Q before a new environmental-protection regulation and MC=10 + 0.5Q after the regulation. Determine a) The cost to consumers from the regulation b) The social cost of the new regulation
Suppose that leather is sold in a perfectly competitive industry. The industry short-run supply curve (marginal cost curve) is P = MC = 3Q. The demand for leather hides is given by Q = 60 − P. a. Find the equilibrium market price and quantity. b. Suppose that the leather tanning releases bad stuff into waterways. The external marginal cost is $5 per unit. Calculate the socially optimal level of output and price for the tanning industry. c. What are...
Suppose that leather is sold in a perfectly competitive industry. The industry short-run supply curve (marginal cost curve) is P = MC = 3Q. The demand for leather hides is given by Q = 60 − P. a. Find the equilibrium market price and quantity. b. Suppose that the leather tanning releases bad stuff into waterways. The external marginal cost is $5 per unit. Calculate the socially optimal level of output and price for the tanning industry. c. What are...
The demand function for an oligopolistic market is given by the equation, Q = 275 – 4P, where Q is quantity demanded and P is price (Note: inverse demand for the dominant firm here is P = 50 - .2Q). The industry has one dominant firm whose marginal cost function is: MC = 12 + 0.7QD, and many small firms, with a total supply function: QS = 25 + P. In equilibrium, the total output of all small firms is
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal cost MCQ) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity...
Part I Suppose that in the market for paper, demand is P=100 - Q. The marginal private cost of producing paper is 10+ Q. However, pollution generated by the production process creates a per unit external harm (i.e., negative externality) equal to 0.5Q (i.e., the level of the externality increases with the quantity produced). 16+1,5 Q (Social cret) 10+Q (private 0 36 45 Top a) What is the (unregulated) market equilibrium and quantity if the externality is not corrected for...
4. In a market for dry cleaning, the inverse market demand function is given by P=160-10 and the (private) marginal cost of production for the aggregation of all dry dleaning firms is given by MC- 10+1Q. Finally, the pollution generated by the dry cleaning process creates external damages given by the marginal external cost curve MEC 1Q Calculate the output and price of dry cleaning if it is produced under competitive cond tions without regulation. The competitive equilbrium quanity is...
Part II: Market Failure in the Passenger Airline Industry and Policy (30%) For full marks: Craphs: Plot graphs to scale on graph paper by hand, include a figure number, title, and label all axis including correct units, be neat and tidy and put in order in the assignment. Introduce the graph with a sentence before it. 2) For algebra, use short sentences to guide the reader (SSTGR) through your work. Example: "To find the perfectly competitive market equilibrium global daily...