Calculate the deadweight loss associated with externality

Assignment Help Business Economics

Reference no: EM13833294

Suppose that demand for a product is Q=140-6P and supply is Q=2P-20. Furthermore, suppose that the marginal external damage of consuming this product is $4 per unit. Does it result in under consumption? Or over consumption? How many more or less units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.

Reference no: EM13833294

Questions Cloud

Benefits that companies can gain from a global strategy : Discuss corporate governance and corporate social responsibility with regard to Face-books privacy policy and What parts of the business do you think the shareholders focus

Calculate the benefit-cost ratio and net benefits : Three mutually exclusive projects are being considered for a remote river valley: Project R, a recreational facility, has estimated benefits of $10 million and costs of $8 million; Calculate the benefit-cost ratio and net benefits for each possible a..

Which types of people have single-peaked preferences : Carrboro has three equal-sized groups of people: (1) type A people consistently prefer more police protection to less; (2) type B people prefer high levels of police protection to low levels and they prefer low levels to medium levels; Which types of..

What is the importance of questioning in the sq3r system : What is the importance of questioning in the SQ3R system

Calculate the deadweight loss associated with externality : Suppose that demand for a product is Q=140-6P and supply is Q=2P-20. Furthermore, suppose that the marginal external damage of consuming this product is $4 per unit. Does it result in under consumption? Or over consumption? How many more or less unit..

Ols estimates of the ß coefficients : yt = β0 + β1xt + β2xt-1 + β3xt-2 + β4zt-1 + ut 1) True, false, explain: OLS estimates of the β coefficients of this model will be biased if xt is correlated with xt-1 2) True, false, explain: OLS estimates of the β coefficients of this model will..

What is the value of consumer surplus : Consider a free market with demand equal to Q = 60-4P and supply equal to Q=2P. What is the value of consumer surplus? What is the value of producer surplus?

Optimal choice between movie and hamburger : Suppose that Ben has $90 to spend on two goods, movie (M) and hamburger (H). The price of a movie is $10 and the price of a hamburger is $2. Ben’s preferences are represented by the utility function: U(M, H) = M *H^2. What is Ben’s optimal choice bet..

A population regression model : 1. Assume that there is a population regression model y = β0 + β1x1 + β2x2 + β3x3 + u and that the model satisfies assumptions MLR1 through MLR5 in the population. Indicate, without explanation, whether the following statements are true or false

User Account

All Pages