This topic contains a solution. Click here to go to the answer
« previous next »
Pages: 1 2  All   Go Down

Author Question: Suppose that in the market for paper, demand is p = 100 - Q. The private marginal cost is MCp = 10 + ... (Read 328 times)

MGLQZ

  • Hero Member
  • *****
  • Posts: 579
Reply #10 on: Jun 18, 2019
Suppose that in the market for paper, demand is p = 100 - Q. The private marginal cost is MCp = 10 + Q. Pollution generated during the production process creates external marginal harm equal to MCe = Q. Is social welfare greater under monopoly or under competition?
Microeconomics ¦ Perloff ¦ 8th Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

moormoney

  • Sr. Member
  • ****
  • Posts: 326
Reply #11 on: Jun 18, 2019
First, the socially optimal quantity of paper is found by setting MCp + MCe = p or . Rearranging yields Q = 30. The competitive equilibrium is found by setting MCp = p or 10 + Q = 100 - Q. Rearranging yields Q = 45. The deadweight loss of those additional units equals (45 - 30) ∗ (70-40)/2 = 225. Under monopoly, the firm sets . The monopoly produces the socially optimal quantity, and therefore has no deadweight loss. Social welfare is greater under monopoly.


Pages: 1 2  All   Go Up
« previous next »
 

Did you know?

About 3% of all pregnant women will give birth to twins, which is an increase in rate of nearly 60% since the early 1980s.

Did you know?

The average person is easily confused by the terms pharmaceutics and pharmacology, thinking they are one and the same. Whereas pharmaceutics is the science of preparing and dispensing drugs (otherwise known as the science of pharmacy), pharmacology is the study of medications.

Did you know?

About 3.2 billion people, nearly half the world population, are at risk for malaria. In 2015, there are about 214 million malaria cases and an estimated 438,000 malaria deaths.

Did you know?

The top five reasons that children stay home from school are as follows: colds, stomach flu (gastroenteritis), ear infection (otitis media), pink eye (conjunctivitis), and sore throat.

Did you know?

When intravenous medications are involved in adverse drug events, their harmful effects may occur more rapidly, and be more severe than errors with oral medications. This is due to the direct administration into the bloodstream.

Reconstruction Drawing of Trajan's Market Reconstruction Drawing of Trajan's Market
Marginal Supply - Demand Curve Marginal Supply - Demand Curve
Hydroelectric power: 2013 Global Market Hydroelectric power: 2013 Global Market
The demand for energy is met by burning coal and other fossil fuels The demand for energy is met by burning coal and other fossil fuels
Infant formula is available in several forms and varies in cost and ingredients Infant formula is available in several forms and varies in cost and ingredients
A cowbird with its foster parent. A female cowbird minimizes her cost of parental care by laying her A cowbird with its foster parent. A female cowbird minimizes her cost of parental care by laying her
Video: Regulation of GFR: autoregulation via myogenic mechanism Myogenic mechanism

For a complete list of videos, visit our video library