Calculate private market equilibrium, Macroeconomics

Assignment Help:

Consider the following Marginal Private Cost (MPC), Marginal Social Cost (MSC) and market demand curves. These curves relate to a market for a product, the production of which generates a negative externality. Use these equations to answer the questions from a) to e). In answering questions a) to e) make sure that you also use a fully labelled and explained diagram.

MPC = 10 + 10Q

MSC = 10 + 12 Q

P = 70 - 5Q

a. What is the private market equilibrium P and Q?

b. What is the socially efficient equilibrium P and Q?

c. Explain in words why the equilibrium in a) is not efficient. Explain in words why the equilibrium in b) is efficient.

d. Calculate the deadweight loss from the negative externality in this scenario.

e. What is the size of the Pigovian Tax required to produce the efficient equilibrium? How much revenue would the government collect if it imposes this tax?

f. Explain in words how a system of marketable permits differs from the Pigovian Tax as a way to correct for the inefficiency associated with the negative externality. Why do economists tend to prefer a system of marketable permits over the Pigovian Tax? There is no need to use a diagram in your answer to f). 


Related Discussions:- Calculate private market equilibrium

frame work, Hello sir, madam... I am hassan PHD student. I''m lost to get...

Hello sir, madam... I am hassan PHD student. I''m lost to get a good frame work of my thesis about e government and economic growth. and I need to know how to measure the variable

Macroeconomic variables, Furthermore it can be seen that there are interest...

Furthermore it can be seen that there are interesting relationships between the remaining variables. Firstly, at the 95% significance level it can be seen that interest rates Grang

Nations total income, If you take nations total income and subtract out pri...

If you take nations total income and subtract out private consumption government consumption what you will find?

Define the multiplier and rate of inflation, 1 (a) List two concerns with i...

1 (a) List two concerns with inflation. (b) Suppose that we are in a condition of fully flexible prices, but production of nails will not go above 200 chairs/month. What price w

Calculate average and probability , 1 .Use the concepts of sampling error a...

1 .Use the concepts of sampling error and z- scores to explain the concept of distribution of sample  means. (this is a paragraph answer needed) 2. Describe the distribution

Exante real interest rate, The exante real interest rate is based on _____ ...

The exante real interest rate is based on _____ inflation, while the ex post real interest rate is based on _____ inflation. A) expected; actual B) core; actual C) actual;

Tennis club, Suppose you belong to a tennis club that has a monthly fee of ...

Suppose you belong to a tennis club that has a monthly fee of $75 and a charge of $5 per hour to play tennis.

Separation of growth and fluctuation, Separation of growth and fluctuation ...

Separation of growth and fluctuation It is very useful to separate the evolution of a variable which grows over time into a trend and fluctuations around the trend. The graphs

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