Compute total cost of pollution when market is equilibrium

Assignment Help Business Economics

Reference no: EM131092868

The perfectly competitive market for a particular chemical, called Negext, is described by the following equations: Demand is given by Q = 100 – 5P Supply is given by Q = 5P For each unit of Negext produced, 4 units of pollution are emitted, and each unit of pollution imposes a cost on society of $1. Compute the total cost of pollution when the market is at equilibrium. Show work. What is total social welfare in the market after taking into account the cost of pollution as well as consumer surplus and producer surplus? Show work. Using a piece of graph paper, graph the supply and demand curves to scale, and label the equilibrium price and quantity you found in part a. Identify the surplus areas on your graph. Compared to your answer to part b, would banning Negext increase or decrease welfare? Explain. Suppose that the government restricts emissions to 100 units of pollution. Compute how this policy affects consumer surplus, producer surplus, and cost of pollution relative to your results in parts a and b. Show work. Would you recommend this policy? Why or why not? Explain.

Reference no: EM131092868

Questions Cloud

The gas is stirred until its pressure : A 1.2 m3 insulated rigid tank contains 2.13 kg of air at 298 Kpa and 100 kPa. The gas is stirred until its pressure is 120 kPa. With dead state conditions 298 K and 100 kPa, and assuming constant specific heat, determine:

Without the energy recovery system : The Autocar E3 refuse truck has an energy recovery system that is expected to reduce fuel consumption by 30%. The fuel cost for a regular refuse truck (without the energy recovery system) is $500 per month.

Reduce fluctuations in the business cycle : How does government implementation of Keynesian fiscal policy seek to reduce fluctuations in the business cycle, and how does this view differ from economic thought prior to the Great Depression?

Production function for producing pairs of slippers : ABC Slippers has the following production function for producing pairs of slippers: q = K L. Its input prices are pK = $80 and pL = $20. It faces a demand curve given by P = 25 – (q/100). a. For q=1024, fill out the following table for combinations o..

Compute total cost of pollution when market is equilibrium : The perfectly competitive market for a particular chemical, called Negext, is described by the following equations: Demand is given by Q = 100 – 5P Supply is given by Q = 5P For each unit of Negext produced, 4 units of pollution are emitted, and each..

Determine the pressure : Four kg of water at 100°C fills a closed container having a volume of 1 m3. If the water at this state is a vapor, determine the pressure, in bar. If the water is a two-phase liquid-vapor mixture, determine the quality.

Firm sells diving masks to two market segments : A firm sells diving masks to two market segments. Segment A has a demand curve given by P = 80 – 2 QA, while Segment B has a demand curve given by P = 60 – (1/2) QB. The firm has fixed costs of $300 and a constant marginal cost (MC) of $16. Calculate..

Firm whose price is below its average cost : A firm whose price is below its average cost:

What is its profit-maximizing level of advertising : The elasticity of demand for a firm’s product is -4 and its advertising elasticity of demand is 0.12. Determine the firm’s optimal advertising-to-sales ratio. If the firm’s revenues are $70,000, what is its profit-maximizing level of advertising?

User Account

All Pages