ZuoTi.Pro
Question

Consider the market for education. The marginal social cost of education (MSC) and the private benefit...

Consider the market for education. The marginal social cost of education (MSC) and the private benefit of education (MPB) are given by the following equations where Q is the n units of education provided per year. MSC 10 + Q MPB 100-Q You are also told that each unit of education provides an external benefit to society of $20 per unit. This external benefit is currently not being internalized in the market.   

  a) Given the MSC and MPB is curves, what is the current number of education uni produced by the market?

b) Is the current level of market production for education the socially optimal amount being education? Explain your answer. What is the socially optimal amount of education?

c) What is the value of consumer surplus (CS) and the value of producer surplus (PS) of the current level of production? Draw a diagram illustrating each of these concepts in the market for education.

d) Given the market level of production, what is the deadweight loss in this market?

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
Consider the market for education. The marginal social cost of education (MSC) and the private benefit...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Problem 2: Externality Consider the market for education. The marginal social cost of education (MSC) and...

    Problem 2: Externality Consider the market for education. The marginal social cost of education (MSC) and the marginal private benefit of education (MPB) are given by the following equations where Q is the number of units of education provided per year. MSC 10+ Q MPB 100-Q You are also told that each unit of education provides an external benefit to society of $10 per unit. This external benefit is currently not being internalized in the market. a) Given the MSC...

  • Suppose marginal benefit is given by P-9 Q, marginal private cost is given by P-2Q, and...

    Suppose marginal benefit is given by P-9 Q, marginal private cost is given by P-2Q, and marginal external cost 1S 2 What is the socially optimal price? 5. What is the deadweight loss? 6. How much would a corrective (Pigouvian) tax need to be to move the market equilibrium to the socially optimal equilibrium?

  • We are considering a market with marginal cost of P=100+2Q and a demand of P=500-2Q. Use...

    We are considering a market with marginal cost of P=100+2Q and a demand of P=500-2Q. Use that information to answer the following questions. a. Find the market equilibrium (price and quantity in the market). b. Find producer and consumer surplus. c. Now imagine production of this good created a negative externality of 1$ per unit of output. Find the socially optimal outcome (price and quantity) taking this externality into account. d. Find consumer and producer surplus at the socially efficient...

  • The accopmanying graph depicts the marginal social cost (MSC) and marginal social benefit (MSB) of pollution...

    The accopmanying graph depicts the marginal social cost (MSC) and marginal social benefit (MSB) of pollution emissions. 1,000 900 Move the point, P, to the point representing the optimal level of pollution. MSC 800 What is the optimal quantity of pollution? 700 Dollars metric tons 400 300 The optimal quantity of pollution is not zero because: 200 MSB O 0 1 2 3 4 5 6 Metric tons of pollution 7 8 9 10 O the marginal social cost of...

  • Suppose that leather is sold in a perfectly competitive industry. The industry short-run supply curve (marginal...

    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...

    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...

  • In a market, demand is given by P = 100 − Q and the (private) marginal...

    In a market, demand is given by P = 100 − Q and the (private) marginal cost of production for the aggregation of all firms (the industry supply curve) is given by MC = Q. Pollution by the industry creates external damages given by the (constant) marginal external cost curve MEC = 30. (a) Calculate the output and price of if the industry operates under competitive conditions without regulation. (b) Calculate the socially efficient price and output of the industry...

  • 3) Assume that the market for energy efficient window installations in San Diego is perfectly competitive. Quarterly inverse supply and inverse demand are: P 1200 3Q (Private MB) P 440Qs (Private...

    3) Assume that the market for energy efficient window installations in San Diego is perfectly competitive. Quarterly inverse supply and inverse demand are: P 1200 3Q (Private MB) P 440Qs (Private MC) neighbors (lowering the overall price of electricity, reducing pollution, and so on) These external benefits to consumers are estimated to be EMB 2Q (the more windows installed, the more external benefit to installing more windows). a) Find the equilibrium price and quantity that will be produced in a...

  • Suppose the demand (i.e. the private marginal benefit) for industrial grade stink bombs is given by...

    Suppose the demand (i.e. the private marginal benefit) for industrial grade stink bombs is given by P=300-2Q and supply (i.e. the private marginal cost) for is given by P=Q. Also, suppose that the marginal external damage of consuming this product is $60 per stink bomb. a. What is the equilibrium quantity of stink bombs sold and consumed? b. What is the socially optimal equilibrium quantity of stink bombs sold and consumed? c. Considering your answers to (a) and (b), are...

  • Externalities I Perhaps ironically, air conditioners produce heat as a waste product (to say nothing of...

    Externalities I Perhaps ironically, air conditioners produce heat as a waste product (to say nothing of any externalities from energy consumption). Air conditioner’s waste warm up nearby outdoor areas. This effect can be substantial in dense cities. Suppose that the following are the benefits/ costs from running an air conditioner on a 90 degree day (Q is the temperature reduction enjoyed by the consumer of the air conditioning): MPB=MSB=30-Q MPC=10 External Cost=5 a) Graph the private/social marginal benefit/cost curves described...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT