Question

Can you help me with these question please?

A saw mill supplies lumber for a demand both depicted below.

$              Qd          Qs

36            7              16

34            8              14

32            9              12

30            10           10 28     11           8

1)What is equilibrium quantity? R: 10

a)What is equilibrium price? R: $30

The mill emits a saw dust smell that residents say that they are accustomed to but is everpresent. The cost of this smell is added in to the costs to make a new supply.

$              Qd          Qs’

36            7              10

35            7.50       9

34            8              8

32            9              6

30            10           4

2)If a tenth unit is now made, which is greater the cost or benefit represented by the demand price?

a)10th unit benefit-cost=?

b)9th unit benefit-cost=?

Questions #a and b combine for a deadweight loss of:

When cutting wood the saw mill emits a screeching that is nothing at low levels but quickly becomes intolerable. Now supply is depicted by:

$              Qd          Qs”

46            2              10

44            3              9

42            4              8

40            5              7

38            6              6

36            7              5

34            8              4

32            9              3

30            10           2

3)What is the new equilibrium quantity?

4)What is the new equilibrium price?10th unit benefit-cost=

Answer 1

2) If 10 unit is produced then benefit=30 and cost=36

b) If 9unit is produced then benefit=32 and cost=35

3) New equilibrium quantity=6

4) new equilibrium price=38

10 unit benefit=30 and cost=46