--%>
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 : Effect on total revenue by raises price

    A price raise from $6 to $8 would effect in: (1) a decrease in total revenue. (2) an increase in total revenue. (3) no change in total revenue. (4) consumers buying more pizza. (5) pizza parlors selling more pizza.

  • Q : Long-run In the long-run, an increase

    In the long-run, an increase in consumer desire for strawberries is most likely to:

    		•
  • Q : Quantity supply or demand to changes in

    When a measure of the responsiveness of one variable to other (for example, quantity supplied [or demanded] to changes within price), elasticity: (w) provides no criterion for identifying responsiveness. (x) depends on the units used to express change

    		•
  • Q : Competitive market Select the right

    Select the right answer of the question. A competitive market will: A) achieve an equilibrium price. B) produce shortages. C) produce surpluses. D) create disorder.

    		•
  • Q : Kinked demand curve about product price

    When an oligopolist is aware about the firm faces a kinked demand curve, this: (1) may cut price along with little expected reaction by rivals. (2) can avoid consumer demand and preferences. (3) may keep product price despite large ch

    		•
  • Q : Define the term privatization What do

    What do you mean by the term privatization?

    		•
  • Q : Excess in balance of trade When there

    When there is an excess in the balance of trade? Answer: When export > import (that is, when export is greater than import).

    		•
  • Q : Cost of inputs in Determinants of demand

    I have a problem in economics on Cost of inputs in Determinants of demand. Please help me in the following question. The entire given are determinants of demand apart from. (i) Taxes and preferences. (ii) The cost of inputs. (iii) Price expectations.

    		•
  • Q : Adverse Selection in buying a defective

    Whenever an on-line seller deceived you into buying a faulty ‘fully preloaded’ iPod, you encompass lost since of: (1) Moral hazard. (2) Rational ignorance. (3) Adverse selection. (4) Bait-and-switch deception. (5) Cognitive dissonance.

    Q : Oligopolistic firms by intersecting two

    In this illustrated figure kinked demand curve model, there two demand curves intersect at point a since the other oligopolistic firms: (w) are rapid to follow both price increases and price decreases by rival firms. (x) will follow p

    		•