Posted: September 16th, 2022

Order Economics Homework Help

a. Construct a table with four columns, P, Qd, Qsp, and Qss. Start the P-column at 10 but then raise it to 50 at increments of 5. Then figure out the Q’s that correspond to each price-level.

b. In a market situation where there is no government intervention and the firms only consider their private marginal costs, what is the equilibrium price and quantity from the table?

c. Were the firms to act socially responsibly and consider the social marginal costs, what is the equilibrium price and quantity from the table?

d. Making use of the algebraic expressions that are given, solve for the equilibrium price and quantities in the two scenarios in 1.b and 1.c respectively.

e. Sketch the results in one large diagram, with all relevant curves clearly labeled.

f. Sketch and calculate the Dead Weight Loss when the firm produces at the output level when it only considers its private marginal cost.

g. How do the equilibrium prices and equilibrium quantities in the two scenarios compare with each other? Is there overproduction or underproduction from society’s stand point?

2. Suppose that Cindy-Loo-Sue and Joe-Who are the only residents of the city of Whoville. They need to determine the number of fire fighters Whoville should have. Fire workers satisfy the characteristics of a pure public good. The marginal benefit that each person receives (in dollar terms) is given by the following table.

Marginal

benefit

for Cindy-Loo-Sue

Marginal

benefit

for Joe-Who

Marginal Benefit to both

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