Question
Homework 2: Pigouvian Taxes Marginal Benefit = MB = 250 - 2*Q Marginal Private Cost =...
Homework 2: Pigouvian Taxes
Marginal Benefit = MB = 250 - 2*Q
Marginal Private Cost = MPC = 10 + 0.4*Q
Marginal Damage = 0.6*Q
Assume markets are perfectly competitive.
1. What would be the DWL from having total pollution damage be zero? (I’m not asking what if the private and social MC curves were the same, but rather what would be the DWL of choosing a quantity such that the total pollution damage was zero.)
2. Instead of having this market be perfectly competitive, let the supply side of the market be a monopoly. What would be the optimal Pigouvian tax to deal with the negative externality now? Show this on a graph that explains what’s going on.
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
1) At equilibrium: Marginal benefit = Marginal private cost 9 - Q = 2Q 9 =...
1) At equilibrium:
Marginal benefit = Marginal private cost
9 - Q = 2Q
9 = 3Q
Q = 3 units
2. Market price, P = 9 - 3 = $ 6
3. Social optimal:
Marginal benefit = Marginal social cost i.e. MPC + MEC
9 - Q = 2Q + Q
9 = 4Q
Q = 2.25 units
4. Social optimal price = 9 - 2.25 = $ 6.75
-------What is the deadweight loss?
------How much would a corrective...
Consider a popular food truck (EMT, perhaps?) The owner faces a marginal private cost (MPC) and...
Consider a popular food truck (EMT, perhaps?) The owner faces a
marginal private cost (MPC) and a marginal benefit (MB) for each
hour it operates. Consider the quantity (Q) of the activity to be
hours of serving food (although you can see how that relates to
quantity of food sold).
MPC = 4Q
MB = 36 – 2Q
Based on this information, how many hours will the truck
operate? I.e. what is the “private solution.”
The food truck...
A competitive refining industry produces one unit of waste for each unit of refined product. The...
A competitive refining industry produces one unit of waste for
each unit of refined product. The industry disposes of the waste by
releasing it into the atmosphere. The marginal benefit for the
refined product is given by MB = 24 - Q, where MB is the marginal
benefit when quantity Q of the product is consumed. The inverse
supply curve (also the marginal private cost curve) for refining is
MPC = 2 + Q, where MPC is the marginal private...
Firms produce garden gnome lawn ornaments with a marginal private cost curve equal to MPC=40+Q. The...
Firms produce garden gnome lawn ornaments with a marginal
private cost curve equal to MPC=40+Q. The production of lawn
ornaments creates a marginal external cost equal to MEC=2Q. The
demand for lawn ornaments is equal to Pd = 200 - Qd .
a) (5 points) In the space below, draw and label these curves.
Be sure the intercepts are correct, but remember it doesn't have to
be drawn perfectly to scale.
b) (2 points) Calculate the quantity and price of...
A competitive refining industry produces one unit of waste for each unit of refined product. The...
A competitive refining industry produces one unit of waste for
each unit of refined product. The industry disposes of the waste by
releasing it into the atmosphere. The marginal benefit for the
refined product is given by MB = 24 - Q, where MB is the marginal
benefit when quantity Q of the product is consumed. The inverse
supply curve (also the marginal private cost curve) for refining is
MPC = 2 + Q, where MPC is the marginal private...
Supply Demand MC = P = 20 + 0.5Q MB = P = 200 – Q...
Supply Demand
MC = P = 20 + 0.5Q MB = P = 200 – Q
1. What is the equilibrium price and quantity in this
market?
2. Suppose the market described above is characterized by a
negative externality. Which of the following best describes the
negative externality concept?
3. Suppose the market described above is characterized by a
negative externality. Which of the following is the best example of
a negative externality?
4. Suppose the market described above involves...
Use the following table for questions 20-21. Quantity Miles (Q) Marginal Benefit (MB) Marginal Cost (MC)...
Use the following table for questions 20-21.
Quantity Miles (Q)
Marginal Benefit (MB)
Marginal Cost
(MC)
1
90
120
2
85
90
3
75
50
4
50
20
5
25
15
6
20
50
7
-45
80
The above table represents the costs and benefits of adding
additional bike-lane miles along a major street.
Review Questions-ECON 306
20. What is the cost of adding the second mile of bike lane?
21. What is the optimal number of bike lane miles...
The market demand (MPB) and supply (MPC) for vaccinations ( Q) are given by the following...
The market demand (MPB) and supply (MPC) for vaccinations ( Q)
are given by the following expressions:
MPB ( Q ) = 12 − 1/4 Q
MPC ( Q ) = 1/4 Q
Assume no externalities arise from the production of the private
good. The consumption of the private good does result in a positive
externality in the form of health benefits. Assume that the health
benefits are directly proportional to the amount of consumed. The
total external benefit from...
Consider the following total cost function for an individual firm: C(q) = 10+ q + (1/4)q^2...
Consider the following total cost function for an individual
firm:
C(q) = 10+ q + (1/4)q^2
The industry demand is estimated to be:
Q = 100 - P
1) Now suppose there is a monopolist facing the industry demand.
Write down the monopolist's pro t function.
2) What is the equation of the monopolists marginal revenue
function? Also, explain how the monopolist's marginal revenue
function differs from the marginal revenue function of a firm in a
long-run perfectly competitive market....
Consider a "market for pollution'' where the marginal abatement cost is given by ???(?)=300−2?MAC(e)=300−2e and the...
Consider a "market for pollution'' where the marginal abatement
cost is given by ???(?)=300−2?MAC(e)=300−2e and the marginal social
cost of emissions is constant at $20$20 per tonnes of emissions. ?e
is measured in tons of emissions.
a) (4) What would be the unregulated market amount of
emissions?
b) (4) What is the socially efficient amount of emissions?
c) (3) Compute the deadweight loss from the unregulated
emissions externality.
d) (4) Give two policies, implied by this model, that can
generate...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 58 seconds ago
asked 1 minute ago
asked 2 minutes ago
asked 2 minutes ago
asked 9 minutes ago
asked 39 minutes ago
asked 40 minutes ago
asked 44 minutes ago
asked 45 minutes ago
asked 45 minutes ago
asked 52 minutes ago
asked 1 hour ago