Calculate the deadweight loss associated with externality

Assignment Help Business Economics

Reference no: EM13734557

The private marginal benefit associated with a product's consumption is PMB=360-4Q and the private marginal cost associated with its production is PMC=6Q. Furthermore, the marginal external damage associated with this good's productions is MD=20

A. How many more units of this product will the free market produce than is socially optimal?

B. Calculate the deadweight loss associated with the externality.

C. To correct the externality, the government decides to impose a tax of T per unit sold. What tax T should it set to achieve the social optimum?

Reference no: EM13734557

Questions Cloud

Determine whether there was a recession : Consider an economy where 1999 is the base year used for all calculations of price indices and constant-price aggregates. The price of the average good counted in GDP was 5% higher in 1997 than in 1999 and real GDP in 1997 was $64,800. In 1998 the ra..

Which president left boldest mark on american history : In this period, 26 men served as president. In an essay of at least 500 words, which president do you think left the boldest mark on American History?

Describe how mpr supports the branding effort : Research MPR's role in branding, and include the following: Explore how MPR supports the branding effort

The federal reserve took policy measure to slow down : In 2000, the Federal Reserve took policy measure to slow down economy. this decision generated some controversy since the actual inflation rate was below 3%. Justify the Fed's move. in this regard, where did they think the actual level of US real GDP..

Calculate the deadweight loss associated with externality : The private marginal benefit associated with a product's consumption is PMB=360-4Q and the private marginal cost associated with its production is PMC=6Q. Furthermore, the marginal external damage associated with this good's productions is MD=20. Cal..

Complete the health care economic issues presentation : Complete the Health Care Economic Issues Presentation.Health Care Economic Issue - Health care insurance issues - underinsured & uninsured Prepare a 10- to 12-slide Microsoft® PowerPoint® presentation with detailed speaker notes that includes the fol..

Analyze each brand story from the point of view of the value : Analyze each brand story from the point of view of the value or values that it portrays. Be specific, and back up your contentions using research

Suppose that the profit a honda dealership makes on selling : Suppose that the profit a Honda dealership makes on selling an Accord is random and is given by the following probability distribution:36% of the time the profit is 800, 26% of the time the profit is 1100; 18% of the time the profit is 1500; and othe..

How is the marginalization demonstrated : Who is being marginalized and how is the marginalization demonstrated? What is causing the marginalization; what thematic area(s) are most relevant?

User Account

All Pages