Graph the private demand and marginal cost curves

Assignment Help Econometrics

Reference no: EM131309508

The private demand for drive-in movies is given by P = 20 - 0.1Q. The industry marginal cost of showing drive-in movies is given by MC = 0.1Q.

a. Graph the private demand and marginal cost curves, and determine the price and quantity of movies that will be shown.

b. Drive-in movies can be viewed imperfectly from outside the fence. The external marginal benefits received by such viewers are given by EMB = 2 - 0.01Q. Graph the external marginal benefit curve, and then use that information to graph the social demand curve.

c. Suppose that all drive-in movies are nationalized and shown for the public good. The Movie Czar chooses the price and quantity of movies that bring the greatest benefit net of costs to all viewers, regardless of the vantage point from which they view the movie. Determine the optimal price and quantity of drive-in movies.

d. Indicate the deadweight loss created by the positive externality as an area on your graph, and calculate its value. (Hint: You'll need to determine how much external marginal benefit the very last unit of output created when drive-ins were privately run.)

e. Can government-run movies potentially improve on the private market outcome when a positive externality exists?

Reference no: EM131309508

Questions Cloud

How has economic thinking changed : How has economic thinking changed the most from the way society thought about it in the past as described in the readings?

Which data mining could be used to support data processing : Describe three examples in which data warehouses and data mining could be used to support data processing and trend analysis in large organizational environment.

Research international communication and write advice memo : Research international communication and write an advice memo.- Write a memo with your advice to someone planning to travel to this country for business.

Imaginary nation of dorados had a population : In 2009, the imaginary nation of Dorados had a population of 8,000 and real GDP of 3,000,000. During the year its real GDP grew by about 2.9%. Which of the following sets of growth rates is consistent with this growth in real GDP? I wanna the p..

Graph the private demand and marginal cost curves : Indicate the deadweight loss created by the positive externality as an area on your graph, and calculate its value. (Hint: You'll need to determine how much external marginal benefit the very last unit of output created when drive-ins were private..

What good or service is provided in this market : What good or service is provided in this market? Who are the buyers and who are the sellers in the market? Are there many sellers in the market?

Healthcare decisions on a system : What kind of insurance, from your point of view, is the most popular? Why? What circumstances make it difficult to base healthcare decisions on a system where the patient, decision maker, and deep pocket are the same person?

Explain services that organization provides through cloud : Explain the services that the organization provides through the cloud, and examine the business operation that is enhanced through providing these services through the cloud.

Discuss joes intercultural skills : Discuss Joe's intercultural skills. Specifically, what mistakes did he make? What did Nakamura's response probably mean?

User Account

All Pages