--%>
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 : Payments in dictionary of economic The

    The economic word for payments for the utilization of capital is: (1) dividends. (2) interest. (3) profit. (4) residuals. (5) royalties. I need a good answer on the topic of Economics problems. Ple

    		•
  • Q : Unambiguously Poverty Poverty is most

    Poverty is most unambiguously: (w) an absolute concept that is easily and precisely defined. (x) more prevalent in North America than elsewhere. (y) the absence of income sufficient to survive in reasonable comfort. (z) a relative concept when poverty

    		•
  • Q : Minimum-wage Select the right ans wer

    Select the right ans wer of the question. Critics of minimum-wage legislation argue that it: A) keeps inefficient producers in business. B) reduces employment.C) undermines incentives to work. D) is deflationary.

    		•
  • Q : Words of Economic Rent about David

    David Ricardo: (w) was the originator of the theory of pure economic rent onto land. (x) believed that land rent was earned since land would not be available at a zero price. (y) observed that marginal land which is just barely helpful commands positi

    		•
  • Q : Causes for diminishing returns to factor

    What are the causes for diminishing returns to factor? Answer: 1) Over utilization of

    		•
  • Q : Problem regarding analyzing persistent

    In analyzing persistent shortages within the U.S. market for adoptable children: (w) children are most reasonably considered investment goods. (x) children might reasonably be functioned as consumer goods. (y) lower prices charged adopting families would result within

    		•
  • Q : Labor Unions and Aggregate Wage Income

    Can someone help me in finding out the right answer from the given options. The least likely outcome when unions succeed in increasing their member’s wages is that: (i) Wages in non-union sectors will drop. (ii) Employment will grow in the non-union sectors. (ii

    		•
  • Q : Principles of Macroeconomics Questions

    (a) Explain the relationship between full employment of resources and full production. (b) Look at the following production possibilities curve illustrating the possibilities in Sluggerville for producing bats and/or p

    		•
  • Q : Choosing a statistical Model Choosing a

    Choosing a statistical Model: A number of problems arise in determining whether the work is truly rigorous or not. It is important to determine whether the model chosen makes theoretical and intuitive sense. <

    		•
  • Q : Break-even levels of output for a firm

    Break-even levels of output for a firm happen where is: (w) total revenue equals total economic cost. (x) accounting profits are zero. (y) total variable cost equals total fixed costs. (z) competitive firms will shut down within the short run.