--%>
Assignment Help - homework help

Externalities and Deadweight Loss

Assume that the demand and supply for a product can be described by the following equations:

Q= 1200-4P
Q= -200+2P

Producing the product results in marginal external damage of $8 per unit.

a. What type of externality is this?

b. Showing your work, calculate difference between the competitive equilibrium quantity and the social optimal quantity.

c. What is the deadweight loss associated with this externality? What is the substantive interpretation of this externality?

   Related Questions in Microeconomics

  • Q : Increasing return to a factor Describe

    Describe the likely behaviour of total product beneath the phase of increasing return to a factor.

    		•
  • Q : Range of market demand in market

    When economies of scale in producing a product persist across the complete range of market demand as: (w) pure competition is the most efficient market structure. (x) competition will prevent monopolization of the industry. (y) compet

    		•
  • Q : Problem based on production

    Refer to the given production possibilities curve and give  answer of following question . At the onset of the Second World War the Soviet Union was already at full employment. Its economic adjustment from peacetime to wartime can best be described by the movemen

    		•
  • Q : Needs of Investments Investments

    Investments require: (w) current outlays, and yield current returns. (x) current outlays, and yield future returns. (y) future outlays, and yield current returns. (z) future outlays, and yield future returns. Pleas

    		•
  • Q : Describe price elasticity of demand

    Price elasticity of demand: The Price elasticity of demand refers to the degree of responsiveness of the quantity demanded to modifications in price. Ed = (ΔQ/Δ P) x (P/Q)

    		•
  • Q : Open Shop-union membership Firms which

    Firms which employ workers devoid of needing any form of either union membership or dues are the: (i) Agency shops. (ii) Laissez-faire shops. (iii) Union shops. (iv) Closed shops. (v) Open shops. Can someone please help me in findi

    		•
  • Q : Screening devices problem The Screening

    The Screening devices employed whenever employers try to save adverse selection by the applicants for place do not comprise: (i) review resumes to recognize applicant’s qualifications. (ii) Needing non-compete clauses which prevent latest employees from working

    		•
  • Q : Lowers mortgage payments on interest

    When interest rates fall and this lowers mortgage payments therefore homebuyers can afford to buy more costly houses, the predictable increase within housing prices is most directly a symptom of: (i) capitalization. (ii) a speculative

    		•
  • Q : Price elasticity beside horizontal

    Hey FRIEND I need your help for query as given below: The price elasticity beside a horizontal demand curve is constant at: (w) zero. (x) infinity. (y) 1. (z) -1. Can someone ex

    		•
  • Q : Expectations of short run effect Most

    Most of the consumers and investors have learned via experience that ‘new’ high-tech equipment becomes outdated quickly, and that prices drop by roughly half annually. They adjust by delaying purchases, waiting for estimated higher quality and lower prices

    		•