Cumulative external cost of production, Macroeconomics

Assignment Help:

A textile mill releases pollution into nearby wetlands, and the associated health and ecological damages are not considered in the private market. Suppose you observe the following market structure:

MPB= 800- .5Q MPC= 20+ .3Q
MEB = 0 MEC= .4Q

A. Find the competitive equilibrium, Qc and Pc, and the efficient equilibrium, Qe and Pe.
B. Graph these curves and clearly mark the differences between these two equilibriums. You do not need to worry about scale or accurately depicting their slopes relativ to each other, your graph just needs to be qualitatively correct.
C. What is the level of deadweight loss at the competitive outcome, relative to the efficient outcome?
D. Suppose the textile mill owned the rights to the wetlands, and it is negotiating with a private environment groups that is willing to pay the mill to produce less output. For the 800th unit of output, determine the range within which a payment would be acceptable to both parties.
E. At an output of 800 units, what is the cumulative external cost of production?


Related Discussions:- Cumulative external cost of production

Demand for the hotel''s rooms, Suppose that a particular large hotel has 79...

Suppose that a particular large hotel has 790 rooms. Furthermore, suppose that the demand for the hotel's rooms are normally distributed with a mean demand of 733 rooms with a stan

Exchange rate management, Exchange Rate Management: Following two  sta...

Exchange Rate Management: Following two  stage devaluation of the Indian rupee  in quick succession in July 1991, the  government introduced Liberalized  Exchange Rate System

Give examples of a monopoly, Give examples of a monopoly and an example of ...

Give examples of a monopoly and an example of perfect competition. Explain how each of your examples matches the textbook's definition of that market structure. Monopoly-a firm tha

Price discrimination is forbidden, Suppose the ABC chemical company discove...

Suppose the ABC chemical company discovers a drug that cures the common cold. ABC has plants in Europe and in the United States and can produce the drug in either continent at a ma

Direct foreign investment, An example of direct foreign investment is given...

An example of direct foreign investment is given by: a. The sale of U.S. government bonds to foreigners. b. The sale of U.S. stocks (equities) to foreigners. c. A multinational cor

calculate the marginal revenue of demand graph, Gas Guzzler Motors is one ...

Gas Guzzler Motors is one of three major auto producers. It is currently producing 6,000 cars a day, and selling them at a price of $10,000 each. Its marketing department tells it

Propensity, different determinants of propensity to consume

different determinants of propensity to consume

Actively-managed mutual funds, A sample of 60 mutual funds was taken and th...

A sample of 60 mutual funds was taken and the mean return in the sample was 13% with a standard deviation of 6.9%. The return on a particular index of stocks (against which the mut

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd