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 275 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?

The FDA recognizes 118 routes of administration.

Did you know?

Fewer than 10% of babies are born on their exact due dates, 50% are born within 1 week of the due date, and 90% are born within 2 weeks of the date.

Did you know?

The most common childhood diseases include croup, chickenpox, ear infections, flu, pneumonia, ringworm, respiratory syncytial virus, scabies, head lice, and asthma.

Did you know?

In 2012, nearly 24 milliion Americans, aged 12 and older, had abused an illicit drug, according to the National Institute on Drug Abuse (NIDA).

Did you know?

Russia has the highest death rate from cardiovascular disease followed by the Ukraine, Romania, Hungary, and Poland.

Many types of edible fungi are grown for the market. Many types of edible fungi are grown for the market.
Test Paper Test Paper
Marginal Products of Physical and Human Capital Marginal Products of Physical and Human Capital
Iraqi market Iraqi market
Suppose a country imports televisions. The country's supply and demand curves are shown in ... Suppose a country imports televisions. The country's supply and demand curves are shown in ...
A company that makes cell phones has the following cost structure. They have fixed costs of ... A company that makes cell phones has the following cost structure. They have fixed costs of ...
Video: Epinephrine/NE (heart rate, altered blood flow, glycogenolysis & bronchodilation)

For a complete list of videos, visit our video library