Question

In: Economics

Question 2: Suppose the demand curve for laptops is: Pd = 52 - 4 * Q,...

Question 2:

Suppose the demand curve for laptops is:

P_d = 52 - 4 * Q, where Q is the quantity demanded.

The supply curve is:

P_s = 11 + 5 * Q, Laptop production, considering the materials used, the wastes created, transportation, and packing results in 8 euro of external costs per laptop.

Solve for the

(1). equilibrium price (P_m) and quantity (Q_m) in the unregulated laptop market. Pm =? & Qm =?

(3). What is total social welfare (W_m) in the unregulated laptop market? Solve for consumer surplus (CS_m), producer surplus (PS_m), and the externality damage (ED_m).

CS_m = ?

PS_m = ?

ED_m = ?

W_m = ?

(4). If the correct Pigouvian tax is instituted, what will be the equilibrium price (P_t) and quantity (Q_t) in the laptop market?

Q_t = ?

P_t = ?

(5). What is total social welfare (W_t) in the laptop market with the correct Pigouvian tax? Solve for consumer surplus (CS_t), producer surplus (PS_t), the externality damage (ED_t), and the tax revenues (TR).

CSt = ?

PS_t = ?

ED_t = ?

TR = ?

W_t = ?

Expert Solution

Rahul Sunny answered 5 months ago

2. Consider an inverse demand curve and inverse supply curve given by Q D = 52,...

2. Consider an inverse demand curve and inverse supply curve given by Q D = 52, 000 − 200P Q S = −8, 000 + 400P a. Find equilibrium price. b. Find equilibrium price. c. Now solve for producer surplus at equilibrium. Show your work! HINT: You will need to know find what price is when the supply curve crosses the y-axis. d. And do the same for consumer surplus at equilibrium. Show your work! e. What if the government...

Example 4: Suppose that the monopolist faces a demand curve for its widgets as q =...

Example 4: Suppose that the monopolist faces a demand curve for its widgets as q = 9 - 0.2p. The firm’s marginal revenue and cost functions are: MR(q) = 45 – 10q and MC(q) = 15 + 5q. The firm’s total cost function is C(q) = 2.5q2 + 15q + 3. How many widgets should the firm produce and sell so that the monopolist can maximize its profits? How much should the firm charge to each of its customers so...

Suppose that the demand curve for wheat is Q= 120-10p and the supply curve is Q=10p...

Suppose that the demand curve for wheat is Q= 120-10p and the supply curve is Q=10p The government imposes a price ceiling p =$ 3 per unit. a. How do the equilibrium price and quantity change? (round quantities to the nearest integer and round prices to the nearest penny) The equilibrium quantity without the price ceiling is 60 and the price without the price ceiling is $6. The equilibrium quantity with the price ceiling is 30. b. What effect does...

Suppose the internal supply curve is given by P=6+(2/3)Q, the internal demand curve is given by...

Suppose the internal supply curve is given by P=6+(2/3)Q, the internal demand curve is given by P=12-(1/3)Q, and the social supply curve is given by P=9+(2/3)Q. a. (3 points) Algebraically solve for the coordinates of the market equilibrium and the coordinates of the social optimum. b. (3 points) Labelling everything, graph these three curves and clearly indicate the market equilibrium, the social optimum, and the triangle corresponding to the deadweight loss. (In the interest of time, you do NOT have to draw...

Suppose you have a demand curve of P = 10 - Q and a supply curve...

Suppose you have a demand curve of P = 10 - Q and a supply curve of P = 2 + Q. If the government imposes a tax of $8 per unit of quantity sold on the sellers in this market, then what is the market quantity traded as a result of the tax? Then, what are the consumer surplus, producer surplus, and deadweight loss (after the $8 tax)?

In a small town in France, the demand curve for wine is given by PD =...

In a small town in France, the demand curve for wine is given by PD = 124 - 2QD and the supply curve for wine is given by PS = 4 + 2QS. Suppose a price ceiling is imposed on wine at a price of $50. This will cause a _____________(shortage/surplus) of ______________ bottles of wine.

Suppose, if ill, that Fred’s demand for health services is summarized by the demand curve Q...

Suppose, if ill, that Fred’s demand for health services is summarized by the demand curve Q = 50 − 2P , where P is the price of services. How many services does he buy at a price of $20? Suppose that Fred’s probability of illness is 0.25. What is the actuarially fair price of health insurance for Fred with a zero coinsurance rate? If the insurance company pays Fred’s entire loss, will the insurance company offer him insurance at the...

Question 3B. (5 Point) CLO3 Suppose a monopolist faces the following demand curve: Q = 200...

Question 3B. (5 Point) CLO3 Suppose a monopolist faces the following demand curve: Q = 200 – 5P Also, the long run total cost of the monopolist is given by TC = 20 + 2Q - .5Q2 a. What the monopolist’s MC function? (1/2 Point) b. What is the monopolist’s MR function? (1/2 Point) c. What is the monopolist’s profit maximizing level of output? (1/2 Point) d. What is monopolist’s profit maximizing level of price? (1/2 Point) e. How much...

Suppose the demand curve for aluminum is Q = 800 – 10P, where P is the...

Suppose the demand curve for aluminum is Q = 800 – 10P, where P is the price per unit of aluminum and Q measures millions of units of aluminum. The private marginal cost of producing aluminum is MC = Q + 20, while the external marginal cost of producing aluminum is $10. Find the equilibrium price and quantity when the firm ignores the cost of the externality; Find the equilibrium price and quantity when the cost of the externality is...

Suppose the supply curve for steel is given by P=Q and the demand for steel is...

Suppose the supply curve for steel is given by P=Q and the demand for steel is given by P=100- 2Q. The production of steel is associated with a constant external cost of $10 per unit. a. Calculate the private equilibrium. What are equilibrium price and quantity? b. What is the deadweight loss associated with the private equilibrium. Calculate and draw a sketch.