The short-run marginal cost curves

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Suppose there are two types of users of firework: careless and careful.

The short-run marginal cost curves of each of the 1000 firms in the fireworks are given by MC = 10+Q, where Q is measured in pounds of cherry bombs per year and MC is measured in dollars per pound of cherry bombs.

The demand curve for fireworks by careful users is given by P=50-0.001Q (same units as for MC).

Legislators would like to continue to permit careful users to enjoy fireworks. But since it is impractical to distinguish between the two types of users, they have decided to outlaw fireworks altogether.

How much better off would consumers and producers be if legislators had the means to effect a partial ban?

Reference no: EM13974817

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