the demand for tylenol, a chemical sold in a perfectly competitive market, is given by Q = 200 - 2P, where the quantity is measured in pounds. the private marginal cost is MC = 20 + 0.75Q, but producing this chemical also leads to an external marginal damage of MD = 5 + 0.25Q.
What is the equilibrium price and quantity of this good if the externality is ignored?
Q= 200-2P
2P= 200-Q
P= 100 - 0.5Q
When externality is ignored, P= MC
20 + 0.75Q= 100 - 0.5Q
1.25Q= 80
Q= 64
P= 100-0.5(64)= 68
the demand for tylenol, a chemical sold in a perfectly competitive market, is given by Q...
3. The demand in a market is Q (P) 150-3P. The supply in the market is QS(P)- 3P- 30 (a) Find the competitive equilibrium in the market (P*, Q*) (b) Determine the levels of Consumer, Producer and Total Surplus in the competitive equilibrium (c) Consumption of the good leads to a negative externality. The external marginal benefit function is mbeQw . Draw a graph that shows the Demand, Supply and the Social Marginal Benefits. where measures units consumed in the...
Question 3 (32 marks) a The market of popcom is perfectly competitive. The market demand curve and supply curve are as follows: Demand: Qp = 2000-P Supply: 2 = 1400 +2P Firm K is one of the many firms producing popcorn in the market. The total cost function and marginal cost function are as follows: TC(q) =1250 +30 +29 MC(q) - 30 +49 i At what output level (g) would the average total cost be minimized? (6 marks) ii What...
1) A good that generates a negative externality is sold in a competitive market. Demand is defined by P(Q)=600-2Q and supply is defined by P(Q)=Q. The externality from production is E(Q)=0.5Q2. a)What is the quantity produced in the competitive equilibrium? Q= b)What is the price in the competitive equilibrium? P= c)What is consumer surplus in the competitive equilibrium? CS= d)What is producer surplus in the competitive equilibrium? PS= e)What is the total value of the externality in the competitive equilibrium?...
1. The market for tortillas is perfectly competitive, with market demand given by p 1.000022, with price in dollars per tortilla and Q in thousands of tortillas. The short-run marginal cost curve for a typical tortilla factory is MC 10+.0005q,with MC in dollars per tortilla and q in thousands of tortillas. The fixed cost of running a factory is $15,000 per firm. (a) If there are 50 identical factories, determine the short-run aggregate supply function. (b) What is the market...
Consider the market for private economics help. Assume it is perfectly competitive. The market's inverse demand curve is p = 1600 -5Q, with Q being the number of students receiving help per quarter and p being price per quarter. Economics help private marginal cost curve is MCP = 100 + 5Q. Also assume that, because economics professors curve their classes, when one student improves her grade, it causes every other student to have a lower grade. This is a negative...
1. The market for tortillas is perfectly competitive, with market demand given by p 1-.000020, with price in dollars per tortilla and Q in thousands of tortillas. The short-run marginal cost curve for a typical tortilla factory is MC = .10 + .0005g.with MC in dollars per tortilla and q in thousands of tortillas. The fixed cost of running a factory is $15,000 per firm. (a) If there are 50 identical factories, determine the short-run aggregate supply function. b) What...
Compute the perfectly competitive equilibrium quantity if inverse demand is given by P = 700 - 12Q and firms face constant marginal cost of mc = 100
[1] A perfectly competitive aluminum producer is currently producing a quantity where the market price is $0.67 per pound (i.e., 67 cents per pound), average total cost is $0.70, and average variable cost of $0.60 (which corresponds to the minimum point on the average variable cost curve). Would you recommend this firm expand output, contract output, or shut down in the short-run? Provide a graph to illustrate your answer. [2] Suppose the local crawfish market is perfectly competitive, with the...
Suppose the market for allergy medicine is perfectly competitive, despite the presence of only 4 firms producing and selling allergy medicine. The demand for allergy medicine is Qd = 100 - p, where Qd is the total number of allergy medicine bottles demanded in the market, measured in thousands per year, and p is the price of a bottle of allergy medicine, measured in dollars per bottle. Each firm has a total cost function of , where q is the...
Suppose that the marginal benefits curve for plastic is given by: MB = 90 – 0.5Q, where quantity is measured in gallons. The private marginal cost curve is given by MC = 0.75Q. Assume that the production of plastic also leads to an additional cost to society of $5/gallon of plastic produced (Marginal External Cost = $5). Important: Please enter numbers, rounded to two decimals (e.g. 10.98, 350.01), without any symbols (do not enter $) for all of the numerical...