Steel firms in the Bay Area produce steel which has a demand equal to PMB=100-Q, where...

Steel firms in the Bay Area produce steel which has a demand equal to PMB=100-Q, where Q is measured in tons. The firms have a private marginal cost of production equal to PMC=10+Q/2. This industrial activity releases numerous pollutants, some of which are deposited onto nearby land (like heavy metals), and the marginal external damage inflicted upon neighbors’ land is MD = Q/4. At the market quantity (QM), what is the deadweight loss?

Expert Solution

Rahul Sunny answered 2 years ago

Firms produce a quantity of a good Q, with marginal social benefits (demand curve) of PMB(Q)...

Firms produce a quantity of a good Q, with marginal social benefits (demand curve) of PMB(Q) = SMB(Q) = 6 − Q. Suppose that the marginal costs of producting the amount Q of the good is PMC(Q) = 2 + Q. Suppose that the industry also creates as a byproduct of the production process a carbon sink, which soaks up excess C02. Suppose the marginal benefit to society of producing Q units is MB(Q) = Q/3. a. What is the...

Consider a market where the inverse demand function is P = 100 - Q. All firms...

Consider a market where the inverse demand function is P = 100 - Q. All firms in the market have a constant marginal cost of $10, and no fixed costs. Compare the deadweight loss in a monopoly, a Cournot duopoly with identical firms, and a Bertrand duopoly with homogeneous products.

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The market demand curve is given by p = 100 - Q Two firms, A and...

The market demand curve is given by p = 100 - Q Two firms, A and B, are competing in the Cournot fashion. Both firms have the constant marginal cost of 70. Suppose firm A receives a new innovation which reduces its marginal cost to c. Find the cutoff value of c which makes this innovation "drastic".

Firms A and B are Bertrand duopolists facing market demand, P = 300-Q, where Q =...

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Bob is a drug addict and his demand for cocaine is Q = 100-3p where Q...

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Suppose that consumer (retail) demand for a product is given by: Q=100−P, where Q is the...

Suppose that consumer (retail) demand for a product is given by: Q=100−P, where Q is the quantity demanded and P is the price. The inverse demand curve (which gives the price as a function of the quantity demanded) is: P=100−Q. The marginal cost of production and average total cost of production are $26 per unit, and the marginal cost of distribution and average total cost of distribution are $10 per unit. Suppose the retail distribution is monopolized by another firm....

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