Question

Part II: Market Failure in the Passenger Airline Industry and Polis ) Farfalla Pleash paper and clude af a ti certi, bet tidy and put in ander in the mot h er 2) Forre the SSTGRE "To find the perfectly comparti l y o பழmal வான வடிவான மழைமை in tamil sis pl s. மன quantity back in the the M M C find they Check with other are a Theme a rcis Share of crude oil and the A dalid and by me G e Let represent the quantity of passenger airflights where w Van Halendack Unrealistically for implicity. production is perfectly competitive and that supply and demand and its roughly comespond to 2018 v Ne w benefits, costs and surplus Alsasume that the released when the discousti c irports, transportmises to get to the co Assume the demand and appl i es in the global coll QⓇP) - 800 r eld te fly from he p ice that e Market price of GHG inteles de for r e the activities ctively as follows e (P)P-400 a) Rearrange the demand to get the demand which is the marginal willingness to payMWTP of consumers and also the marc h e Write down an equation for the M as a function of ot h bled Fil b) Rewape the supply equation to get the supply the find the equation of the marginal producer CO(MCPlaton a pap Bahelede Mem p paper which will help you to check your work c) Set the equal to and for the market and the find the market price Label the o rph d) Assuming a competitive market equilibrium on Fig. 1. Welthe n ting the non equity weighted motary values of the following users class bol.comer benefits ii) total consumer costs expenditure) iii) total conser plus v) total variable producer benefits (revenue) vi) al variable producer costs vil) total variable producer surplus Vi total private surplus e) Calculate the total private surplus the perfectly market location (area triangl e height) Suppose that each one of Comisiones a nuestra comparties of S heet global warming en diction and climate change t h e care price is - 5800 Bone CO. Based on estimates around trip between Van d ali mission of some Co. We will refer to this a n d the che price by the CO2 emissions per trip show that arealestra costo (MC h L o ther e-Co, estremal costs of flying and contemailbenefit. Formplicity them-CO, the following calculations thargal costas a functie Raple the marginal d aga v e free graphie d e the marginalteracother ia Lohel both the market and socially efficient and prices Usaha te find the office prid o d hly compare these with that of the market in your concluding met Label the following your hand calculate the value for so c ial market quantity al social plus efficiel quity ) ) loss of total cual surplus at t e thed D) Find the marginal Pigta that will correct this to make it socially efficient and label on the Fig . Als, calculate the total Pipetas collected and the area that represents it Find the price of an air-flight round trip wil under this Pie Deest increase decrease the total social surplus Find the socially efficient quaton round-trip fights and hele the Assuming perfect competition, write down the price of around under the Neck m) Given the above answers, do you think that Canada's carbon price of S tone CO2 will have a significant impact on flying? What about if this was raised to S C O-

Answer 1

Page No. a) a (P) = 600-I (demond equation) DATE: 700- Реачов — зар Inderceloten Ipio 12400 a soolo Price 2100- o (P) = P - you (supply) P = 0 + 400 (Inverse supply equation) А4 Ф" -о, Речоо a = 8oo ; P = 1200 Priten 1200 t Quantity TOO

Pro No. o now setting me com equal to metode mblono = me proet 2400-3 0 = at you 2000 = 40 a l Market Cuantity = Fing a + 40o = rout you mar gool Xey 20%. t603 e com o s har en AD it duantity SOD a) i Total consumer benefits - Ar of Fo - COF (EFt AD) = Total consumer benefits = I 180o) (90072400) 250 (3300) 825000 Total consumer costs = Price x cluantity = 900 x 500 = 450000 In Total consumer surblue = Total Consumer Total consumer benefits 120000-1500000 = 375800

Page No. 2 Total variable producer benefit = Revenue = Pill DATE: 1 e qoox goo =4500oo vil Total vañable costs e variable costs = Ar of CEFO - = LÓF) (CO+EF) at (800) (400+ 900) =(250) (1300) = 325000 1. nil Total variable produser = - surplus Total producer - Total producer benefit cost = 450000 - 325000 = 125 Dou vil Total pn vate surplus - Producer t Consumer T surplus surplus = 125000 + 375000 = 5ooooo