Reference no: EM1363327
2. Suppose there is a good for which the private marginal cost curve (the supply curve) is given by the equation P = X/2 + 4. The production of this good also causes a negative externality on third parties. The dollar value of these externalities is $2 at all production levels. The demand for this good is given by the equation P=10 - X.
a) Write down the equation that gives the social marginal cost curve.
b) In a graph, draw supply, demand and social marginal cost curves.
c) Calculate the equilibrium of this market. Then, calculate the dead-weight loss that is caused by the externality.
d) To get rid of the dead-weight loss resulting from the negative externality, the government imposes taxes. Now the suppliers of the good are required to pay a $2 tax on each unit they sell. Write down the equation for the supply curve that arises after this policy. Calculate the changes in consumer surplus, producer surplus, government revenue and third party surplus. Also, show these changes on a graph.
e) Finally, calculate social benefit from this public policy. What are the net social benefits from this policy?
|
Expense results with budget expectations
: Identify how operating budgets are developed. Compare five to seven expense results with budget expectations, and describe possible reasons for variance.
|
|
What must be done to increase the velocity of a rocket
: what must be done to increase the velocity of a rocket. Calculate the horizontal force that must be applied to produce an acceleration.
|
|
Operations - critical path
: Why would subcontractors for a government project want their activities on the critical path and under what conditions would they try to avoid being on the critical path?
|
|
Compute operating and financial and total leverage
: Based on fixed costs of $11,520,000, variable costs of $11.25 per unit, production volumes of 4,975,000 units, with an interest expense of $1,326,400
|
|
Compute the changes in consumer surplus-producer surplus
: Compute the changes in consumer surplus, producer surplus, government revenue and third party surplus. Also, show these changes on a graph.
|
|
Explain and imagine you are consulting with a manager
: Explain and Imagine you are consulting with a manager of a business that sells cleaning supplies to nursing homes
|
|
Health policies-health determinants and health
: Discuss the connection between health policies, health determinants, and health.
|
|
Abc system activities-unit-related
: Discuss the differences between unit-related, batch-related, and product-sustaining activities. Give one example of each type of activity.
|
|
Find the optimal price and output combination
: Consider instead that the stations seek to maximize its profits from sales of the DVDs and what price should it charge? How many DVDs should it order from which supplier?
|