Solution-What is total social welfare

What is total social welfare

Reference no: EM132669250

Suppose that the demand curve for an electronic tablet is:Pd = 200 - 3Q where Q is the number of demanded in thousands. The supply curve is:

PS = 20 + 3Q

where, again, Q is the measured in thousands. Production of the tablets, considering the materials used, the wastes created, transportation, and packing results in $30 of external costs per tablet.

a) Solve the equilibrium price and quantity in the tablet market without any regulation algebraically.

b) What is total social welfare in the tablet market without any regulation? Solve for consumer surplus, producer surplus and the externality damage algebraically.

(Be careful about the units.)

c) If the correct Pigovian tax is instituted, what will be the new equilibrium price and quantity in the tablet market? Solve algebraically.

d) What is total social welfare in the tablet market with the correct Pigovian tax? Solve for consumer surplus, producer surplus, the externality damage, and the tax revenues algebraically.

Reference no: EM132669250

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What is total social welfare

Reference no: EM132669250

Reference no: EM132669250

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