What is the socially optimal level of output
Course:- Microeconomics
Reference No.:- EM13700121

Assignment Help
Assignment Help >> Microeconomics

A perfectly competitive industry has an inverse demand for its output given by p Q = ? 100 , and its supply function is given by MC Q = + 30 . The process of making Q also generates pollution, g, in the amount g Q = ? 0.5, and the total external cost of g to society is 2 EC g = ? 3.

(a) What is the industry’s marginal external cost function?

(b) If the industry chooses its output level ignoring the marginal external costs, how much output will there be?

(c) What is the socially optimal level of output?

(d) If you were to design a unit tax on output to achieve the socially optimal output level, how big would this tax be?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Microeconomics) Materials
How will the marginal and average cost curves of the typical pure competitor shift or change and what is the level of price, output, and amount of profit for an unregulated mo
car breaks down and you are deciding to have it repaired. The most relevant issue in this economic decision is:A. How much you spent on past repairs on the car B. How much you
What role does ethnicity play in the politics of a given Asian Pacific country - How does film, fiction, or art represent economic, political, or social trends in a given Asia
Property rights are protected in the current laws of states usually found in the form of a constitution or a bill of rights. The United States Constitution provides explicitly
Suppose the Tampa Bay Rays baseball team charges $10 bleacher seats and sells 250,000 of them over the course of the season. The next season, the Rays intends to increase t
Gillette's shareholders, Chairman and CEO James Kilts indicated, "Despite several new product launches, Gillette's advertising-to-sales declined dramatically . . . to 5.5 pe
Identify the components of the growth accounting formula.  Discuss the weights of each of these components and the different effect that each weight has on output and each oth
Mayor Grinch imposes a $1 tax on Zlurp. What is consumption per person now? Calculate consumer surplus, the external cost, goverment revenue, and total surplus per person.