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

Assigment question, Ask question #Minimum 100 wordsThe following is the inf...

Ask question #Minimum 100 wordsThe following is the information from the national income accounts for a hypothetical country: GDP

Monetary Policy.., Suppose the banking system has reserve of $750000, deman...

Suppose the banking system has reserve of $750000, demand deposits of $2500000 and a reserve requirement of 20%. a. if the fed now purchases $125,000 worth of govt bonds from the

Main causes of inflation in an economy, Question 1: Differentiate betwe...

Question 1: Differentiate between income, price and cross elasticities of demand. How will the concept of price elasticity be useful to the owner of a supermarket who wan

Calculating the accounting and economic profit , Kate uses a sewing machin...

Kate uses a sewing machine to alter and repair clothes for one year in her own small business, Kate's Tailoring. She earns $20,000 during the year for various sewing projects. In t

Define the term- wages and income, Define the term- Wages and income R...

Define the term- Wages and income Remember that by wage we mainly mean what you receive for working one hour, whereas income is the total revenue from all sources over a longe

Government in the cross model, The government in the cross model ...

The government in the cross model Net taxes NT(Y) depends positively on real GDP in the cross model In this model when national income increase

What are the slopes of demand curves, Use the points on the graph below to ...

Use the points on the graph below to answer the following questions. i)   What is Ep along D1 (from A to B)? ii)  What is the Ep along D2 (from X to Y)? iii) What are

Determination of all the variables in the classical model, The below diagra...

The below diagram demonstrates how all the variables are determined in classical model:  Figure: Determination of all the variables in the classical model a) Start at

Interest rates, what is real and norminal interest rates?

what is real and norminal interest rates?

Increase in supply, Explain the adjustment to the new equilibrium price fro...

Explain the adjustment to the new equilibrium price from an increase in supply.

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