what
is the deadweight loss after the tax? I know 24 is the optimal
tax.Homework Answers
The optimal tax will be that level of tax which is equal to marginal damage occurs at the socially optimal level of output.
Private optimal output level will be that point where private marginal benefit or demand is equal to marginal private cost i.e supply. It will be equal to P = 240 - 9Qd = 3Qs. Therefore 240 - 9Q = 3Q , or 12Q = 240, or Q = 240/12 =20. Therefore P = 3*Q = 3*12 =36.
Private equilibrium Q= 12, P=$36
Now if we add the marginal damage with supply then it will be social marginal cost. Social marginal cost function will be MD + P = 24 + 3Qs. Therefore SMC = 24+3Qs.
Equalising SMC and demand we get, 24 + 3Qs = 240 - 9Qd , or 24 + 3Q = 240 - 9Q , or 12Q = 240 -24 =216 , or Q = 216/12 = 18. P = 240 - 9Q = 240 - 9*18 = 240 - 162 = $78.
Therefore social optimal quantity is Q=18, price = $78.
Difference between social optimal quantity and private quantity is 20 -18 =2.
Difference in optimal tax i.e $24 and private equilibrium price is $36 - $24 = $12.
Therefore dead weight loss = 1/2*12*2 = $12. Therefore dead weight loss =12. Here 12 is the base and 2 is the height of triangle.
Add Answer to:
what
is the deadweight loss after the tax? I know 24 is the optimal
tax.
Question...
a. Ae you uru ires the extensive burning of coal, and wing information about the steel...
a. Ae you uru ires the extensive burning of coal, and wing information about the steel industry. parket inverse) demand and supply for steel are 3. The process of transforming iron ore into steel requires the thus creates air pollution. We are given the following inform Assume that it is perfectly competitive. The market inverse Pa = 20 - di el production can be described by: P, = MC = 2 + 4s. Further, the marginal pollution damage from steel...
Deadweight Loss of Monopoly Question: Please provide work to help me understand, thanks! 1. Deadweight loss...
Deadweight Loss of Monopoly Question: Please provide work to
help me understand, thanks!
1. Deadweight loss of monopoly Suppose that electricity consumers have an inverse demand curve given by: P(C)=1-, There is one supplier of electricity, which has a total cost function given by: ce) = You can assume that there are no externalities associated with electricity consumption or production. 1.1. What is the marginal cost function? Draw the marginal cost function and the inverse demand curve on the same...
I Page 1 Assignment 1 Due: Beginning of class, February 13, 2020 1. Deadweight loss of...
I Page 1 Assignment 1 Due: Beginning of class, February 13, 2020 1. Deadweight loss of monopoly Suppose that electricity consumers have an inverse demand curve given by: P(e) = 1-e, There is one supplier of electricity, which has a total cost function given by: cle) = ? You can assume that there are no externalities associated with electricity consumption or production. 1.1. What is the marginal cost function? Draw the marginal cost function and the inverse demand curve on...
cost of cleanup is constant at $120 per unit. What is the optimal level of pollution...
cost of cleanup is constant at $120 per unit. What is the optimal level of pollution cleanup in each of the two regions? 12. The private marginal benefit associated with a product's consumption is PMB = 350 – 4Q and the private marginal cost associated with its production is PMC = 6Q. Furthermore, the marginal external damage associated with this good's production is MD = 4Q. To correct the externality, the government decides to impose a tax of T per...
Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely...
Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the a. eighth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. b. first year after it is imposed than in the eighth year after it is imposed because demand and supply will be more elastic in the first...
Problem Set 2. Market Failure: Externalities and Common Pool Resources EconS 326 1. Cigarette production requires...
Problem Set 2. Market Failure: Externalities and Common Pool Resources EconS 326 1. Cigarette production requires use of energy, water and other resources. When planting tobacco leaves, fertilizer is used that creates runoff and water pollution in waterways. Tobacco smoke pollutes indoor and outdoor environments and remains a pervasive and persistent source of toxicants long after the cigarette is extinguished. a. Is there too little, too much or the correct amount of cigarette produced or consumed from a socially optimal...
7. Correcting for negative externalities - Taxes versus tradablepermits Power stations emit sulfur dioxide as a...
7. Correcting for negative externalities - Taxes versus tradablepermits Power stations emit sulfur dioxide as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a negative externality of power production. Suppose the U.S. government wants to correct this market failure by getting firms to internalize the cost of pollution. To do this, the government can charge firms for pollution rights (the right to emit a given quantity of sulfur...
Part I Suppose that in the market for paper, demand is P=100 - Q. The marginal private cost of producing paper is 10+ Q...
Part I Suppose that in the market for paper, demand is P=100 - Q. The marginal private cost of producing paper is 10+ Q. However, pollution generated by the production process creates a per unit external harm (i.e., negative externality) equal to 0.5Q (i.e., the level of the externality increases with the quantity produced). 16+1,5 Q (Social cret) 10+Q (private 0 36 45 Top a) What is the (unregulated) market equilibrium and quantity if the externality is not corrected for...
Question 1 Suppose that the market demand curve and the market supply curve are described, respectively,...
Question 1 Suppose that the market demand curve and the market supply curve are described, respectively, by D(p) 240 3p and S(p) 5p. Compute the equilibrium price-quantity pair (p*,q*) (A) (20, 100) (B) (20, 180) (C) (30, 150) (D) (35, 135) (E) (40,200) Question 2 The setup is the same as in Question 1, except that the government now levies a quantity tax in the amount of $8 per unit of the good. Letting pf denote the price buyers pay...
a. Ae you uru ires the extensive burning of coal, and wing information about the steel industry. parket inverse) demand and supply for steel are 3. The process of transforming iron ore into steel requires the thus creates air pollution. We are given the following inform Assume that it is perfectly competitive. The market inverse Pa = 20 - di el production can be described by: P, = MC = 2 + 4s. Further, the marginal pollution damage from steel...
Deadweight Loss of Monopoly Question: Please provide work to
help me understand, thanks!
1. Deadweight loss of monopoly Suppose that electricity consumers have an inverse demand curve given by: P(C)=1-, There is one supplier of electricity, which has a total cost function given by: ce) = You can assume that there are no externalities associated with electricity consumption or production. 1.1. What is the marginal cost function? Draw the marginal cost function and the inverse demand curve on the same...
I Page 1 Assignment 1 Due: Beginning of class, February 13, 2020 1. Deadweight loss of monopoly Suppose that electricity consumers have an inverse demand curve given by: P(e) = 1-e, There is one supplier of electricity, which has a total cost function given by: cle) = ? You can assume that there are no externalities associated with electricity consumption or production. 1.1. What is the marginal cost function? Draw the marginal cost function and the inverse demand curve on...
cost of cleanup is constant at $120 per unit. What is the optimal level of pollution cleanup in each of the two regions? 12. The private marginal benefit associated with a product's consumption is PMB = 350 – 4Q and the private marginal cost associated with its production is PMC = 6Q. Furthermore, the marginal external damage associated with this good's production is MD = 4Q. To correct the externality, the government decides to impose a tax of T per...
Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the a. eighth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. b. first year after it is imposed than in the eighth year after it is imposed because demand and supply will be more elastic in the first...
Problem Set 2. Market Failure: Externalities and Common Pool Resources EconS 326 1. Cigarette production requires use of energy, water and other resources. When planting tobacco leaves, fertilizer is used that creates runoff and water pollution in waterways. Tobacco smoke pollutes indoor and outdoor environments and remains a pervasive and persistent source of toxicants long after the cigarette is extinguished. a. Is there too little, too much or the correct amount of cigarette produced or consumed from a socially optimal...
7. Correcting for negative externalities - Taxes versus tradablepermits Power stations emit sulfur dioxide as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a negative externality of power production. Suppose the U.S. government wants to correct this market failure by getting firms to internalize the cost of pollution. To do this, the government can charge firms for pollution rights (the right to emit a given quantity of sulfur...
Part I Suppose that in the market for paper, demand is P=100 - Q. The marginal private cost of producing paper is 10+ Q. However, pollution generated by the production process creates a per unit external harm (i.e., negative externality) equal to 0.5Q (i.e., the level of the externality increases with the quantity produced). 16+1,5 Q (Social cret) 10+Q (private 0 36 45 Top a) What is the (unregulated) market equilibrium and quantity if the externality is not corrected for...
Question 1 Suppose that the market demand curve and the market supply curve are described, respectively, by D(p) 240 3p and S(p) 5p. Compute the equilibrium price-quantity pair (p*,q*) (A) (20, 100) (B) (20, 180) (C) (30, 150) (D) (35, 135) (E) (40,200) Question 2 The setup is the same as in Question 1, except that the government now levies a quantity tax in the amount of $8 per unit of the good. Letting pf denote the price buyers pay...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago