What is the socially optimal market price, Managerial Economics

Assignment Help:

 Consider a manufactured good whose production process generates pollution. The annual demand for the good is given by Qd=100-3P. The annual market supply is given by Qs=P. In both equations, P is the price in dollars per unit. For every unit of output produced, the industry emits one unit of pollution. The marginal damage from each unit of pollution is given by 2Q.

a)    Find the equilibrium price and quantity in a market with no government intervention.

b)   At the equilibrium you computed, calculate: (i) consumer surplus; (ii) producer surplus; (iii) total dollars of pollution damage. What are the overall social benefits in the market?

c)    Find the socially optimal quantity of the good. What is the socially optimal market price?

d)   At the social optimum you computed, calculate: (i) consumer surplus; (ii) producer surplus; (iii) total dollars of pollution damage. What are the overall social benefits in the market?

e)    Suppose an emissions fee is imposed on producers. What emissions fee would induce the socially optimal quantity of the good?


Related Discussions:- What is the socially optimal market price

Cost concepts, Ask question #MinimumElectron Control, Inc., sells voltage r...

Ask question #MinimumElectron Control, Inc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sen

What do economists mean by the term efficiency, Problem 1: The national...

Problem 1: The national budget exercise is nothing more than a political exercise. Discuss. Problem 2: a. What do economists mean by the term ‘efficiency'? b. What

Occurrence of stagflation , Occurrence of Stagflation Two possible theo...

Occurrence of Stagflation Two possible theoretical explanations can be given for the occurrence of stagflation almost all over the world. The first explanation follows directly

Macro-economic policy objectives, Macro-economic policy objectives The...

Macro-economic policy objectives The major macro-economic policy objectives which the governments strive to achieve are: i. Full employment One of the main objectives

Inflation, Meaning The word inflation has at least four meanings. ...

Meaning The word inflation has at least four meanings. A persistent rise in the general level of prices, or alternatively a persistent falls in the value of money.

Mba, what is third degree discrimination

what is third degree discrimination

Example on relationship between marginal and average cost, Q. Example on Re...

Q. Example on Relationship between marginal and average cost? This relationship between marginal and average cost can easily be recalled with the aid of Fig. below. It can be s

Determine the perfectly competitive firms profit, 1. Suppose in a perfectly...

1. Suppose in a perfectly competitive industry the market demand and supply forces combine to produce a short-run equilibrium price of Rs 70. Suppose that a firm in this industry h

Explain about time series analysis, Q. Explain about Time series analysis? ...

Q. Explain about Time series analysis? An analysis of relationship between variables over a period of time. Time-series analysis is helpful in assessing how an economic or othe

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