--%>
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 : Open market operation-Deficient demand

    Open market operation signifies to the sale and purchase of securities by the Central Bank in case of deficient demand whenever AD falling short of AS at full employment, the Central Bank purchases securities in open market and makes payment to the se

    		•
  • Q : Market form-product distinguishing In

    In which market form, the products are distinguished. Answer: In Monopolistic competition

    		•
  • Q : Analytic Time-The Market Immediate The

    The analytical period of time is very short that the firm could not adjust output by hiring more or less of a variable resource was recognized by Alfred Marshall as: (1) Immediate or market period. (2) Long run. (3) Short run. (4) Technological or temporal long run.

    		•
  • Q : Optimization and Heuristics Can someone

    Can someone help me in finding out the right answer from the given options. No one can execute all the mental gymnastics essential to perfectly process information and hence all their decisions are mathematically optimal, therefore most of the people rely heavily on m

    		•
  • Q : Maximize profit by marginal revenue and

    Prohibition Corporation’s very famous St. Valentine’s Day software is going within version 6. The very first point Prohibition requires to classify in its quest to maximize profit is the: (1) point e. (2) point f. (3) point g. (4) point h.

    		•
  • Q : Examples of Substitution goods

    Illustrations of goods which are close substitutes comprise: (i) Technology and capital. (ii) Motorcycles and helmets. (iii) Chopsticks and forks. (iv) Cowhides and beef. Find out the right answer from the above op

    		•
  • Q : Comparison between supply curves

    Comparing supply curves S2 and S3, supply is: (w) more price elastic along S2 than along S3. (x) more price elastic along S3 than S2. (y) equally elastic along both when they have simil

    		•
  • Q : Help In the quintile distribution of

    In the quintile distribution of income, the term "quintile" represents

    		•
  • Q : Definition of Consumer Surplus The

    The difference among the price a consumer would have been eager to pay for the commodity and the price consumer really has to pay is termed as: (i) Gain. (ii) The substitution effect. (iii) The income effect. (iv) Consumer surplus.

  • Q : For luxury items absolute value of

    The absolute value of price elasticity of demand tends to be lower when: (w) the greater the number of substitutes available. (x) the more important the product is in classical budgets. (y) for necessities than for luxury items. (z) when more time is

    		•