) The supply of paper is described by the following equation:
Qs = 5P + 10
The demand is described by:
Qd = 400 – 10P
If there is a $10 positive externality per unit of output, what is the socially optimal output?
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173 units |
|
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183 units |
|
|
193 units |
|
|
203 units |
The supply of paper is described by the following equation:
Qs = 5P + 10
The demand is described by:
Qd = 400 – 10P
If there is a $10 negative externality per unit of output, what is the socially optimal output?
|
67 units |
|
|
87 units |
|
|
107 units |
|
|
127 units |
The supply of paper is described by the following equation:
Qs = 5P + 10
The demand is described by:
Qd = 400 – 10P
The free market price is?
|
$26 |
|
|
$46 |
|
|
$66 |
|
|
$86 |
The supply of paper is described by the following equation:
Qs = 5P + 10
The demand is described by:
Qd = 400 – 10P
The free market output is?
|
120 units |
|
|
140 units |
|
|
160 units |
|
|
180 units |
A) Equilibrium occurs where MPB=MSC
MSC=MPC+ Marginal external benefit= 5(P+10)+10
At Equilibrium,
5(P+10)+10= 400-10P
5P+60=400-10P
340/15= P
22.3=P
Socially optimal quantity= 400-10*23= 173 units.
B.At equilibrium, 5(p-10)+10=400-10p
5p-40=400-10p
P=440/15= $29.3
Socially optimal quantity= 400-10*29.3 = 107
C. Free market price is where Qs=Qd
5p+10=400-10p
Free market price= 390/15=$ 26
D. Free market quantity= 400-10*26= 140 units.
) The supply of paper is described by the following equation: Qs = 5P +...
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