Encourage the optimal price of chocolate production

Assignment Help Macroeconomics

Reference no: EM1337159

Optimal amount of chocolate production

Amityville has a competitive chocolate industry with the (inverse) supply curve
Ps =440+Q. While the market demand for chocolate is Pd=1200-Q, there are external benefits that the citizens of Amityville derive from having a chocolate odor wafting through town. The marginal external benefit schedule is MEB =6-0.05 Q.
a) Without government intervention, what would be the equilibrium amount of chocolate produced? What is the socially optimal amount of chocolate production?
b) If the government of Amityville used a subsidy of $S per unit to encourage the optimal amount of chocolate production, what level should that subsidy be?

Reference no: EM1337159

Questions Cloud

Explain executives based on their needs : assume that you acting as an IT consultant for them. What software solutions would you recommend to your executives based on their needs? Explain your answer.

Explain about market and mixed economies : Explain about Market and Mixed Economies and Debate the benefits and drawbacks of both market and mixed economies

Find the mean and the standard deviation : Find the mean and the standard deviation of the following frequency distribution.

Developing rfp for a real-world project : Develop a RFP for a real-world project that you have participated in. Optimally, this would be an actual business or government project.

Encourage the optimal price of chocolate production : If the government of Amityville used a subsidy of $S per unit to encourage the optimal amount of chocolate production, illustrate what level should that subsidy be.

Identify the fraud risk factors : (Fraud risk) Consider the following situation. Company A is a public company that competes in the highly competitive market for manufactured household products. Identify the fraud risk factors that are present in the case above.

Explain name and discuss the 4 ps of marketing : Explain name and discuss the 4 Ps of Marketing and what kind of adjustments may be necessary in order to sell in foreign markets

Discuss on business performance management : define how Knowledge Management benefits organizations.

Illustrate what are the pros and cons of switching to market : Illustrate what are the pros and cons of switching to a market for kidneys. Currently, people can volunteer to donate one of their two kidneys, and getting a kidney is dependent upon your need and prognosis and sometimes having a relative who is a..

User Account

All Pages