Acres 1 2 3 4 s 6 7 -$5 -$2 SO Sophia $2 $10 8 6 3 1 0 0 Amber $24 18 14 8 2 Cedric $6 5 Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equa If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus wi Sophia receive? 4 3 1
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- 1. If the popular television show The Bachelor is shown on pay-per-view television every Monday at 9 p.m., then the demand curve for each episode is given in the accompanying graph 50 40 30 20 10 16 32 48 64 80 Viewing households (millions) If each episode were shown for free, total economic surplus would be Multiple Choice $4,000 million $2,000 million $1,280 million $720 million Cost ($/episode)The figure below shows the demand curve for a U.S. farmer for irrigating his land. It costs $100 per acre to irrigate the land. Each acre of land irrigation generates salty runoff that winds up in the Colorado River. It costs $50 to desalinate this river water so Mexican farmers can irrigate their crops. Price ($) 275 250 225 200 175 150 125 100 75 50 25 0 DMBMB sed 10 20 30 40 50 60 70 80 90 100110120 Irrigation (acres) Tools (2) MCpvt MC socialQuestion 10 50 45 40 35 30 25 20 15 - 10 5 0 0 10 20 30 40 50 60 70 80 90 100 Quantity Consider the figure shown. What is the consumer surplus when the P-$15? Selected Answer: Correct Answer: Answer range +/-0.1 (1224.9-1225.1) 490 1,225 Question 11. Q Search
- Assume integer quantities. Assume the following supply and demand schedules for a perfectly competitive market without externalities. 1 3 4 6 MWTP $32.50 $27.50 $6 $25.50 $12 $20.50 $12.50 $7.50 $4.50 MC $2 $16 $21 $30 $32 What is total surplus in equilibrium? Round to two decimal places and do not include the currency symbol. If your answer is $1.125, enter 1.13.HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow HighFlyer Airlines to give passengers more comfort and sell more tickets at a higher price. However, redesigning the cabin means rethinking many other elements of the airplane as well, like engine and luggage placement, and the most efficient shape of the plane for moving through the air. HighFlyer Airlines has developed a list of possible methods to increase cabin space, along with estimates of how these approaches would affect the planes operating costs and ticket sales. Based on these estimates, Table 13.5 shows the value of R, how much should the firm invest in R on top of the private return; that is, an R private return to HighFlyer Airlines would have a 9 social return. How much investment is socially optimal at the 6 interest rate?(Negative Externalities) Suppose you wish to reduce a negative externality by imposing a tax on the activity that creates that externality. When the amount of the externality produced per unit of output increases as output increases, the correct tax can be determined by using a demand-supply diagram; show this. Assume that the marginal private cost curve slopes upward. Negative Externalities: The Market for Electricity in the Midwest:
- Q4. (a) If you are a firm owner who is operating in the perfect competitive market, you areproducing socially efficient outcome. Does it imply that your profits are zero? If you become amonopolist then why do you deviate from the socially efficient outcome? b) In Delhi, as the winter season is approaching, how will it affect the demand function and themarket equilibrium of sweater market? Now after that if the price of wool increases how will themarket equilibrium be affected?Price ($) 45 42 35 39 36 33 30 27 24 21 7852963 18 15 12 S Quantity (in thousands) According to the graph shown, if the market goes from equilibrium to having its price set at $18: 1 2 3 4 5 6 7 8 9 10 A producer surplus will be $8,100. B) consumer surplus will be $12,150. deadweight loss will be $2,250. (D) deadweight loss will be $15,000. Danswer all please 4. The effects of property rights on achieving efficiency Consider a lake found in the town of Center Barnstead, and then answer the questions that follow. The town has a campground whose visitors use the lake for recreation. The town also has a chemical plant that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the chemical plant's waste decreases the campground's economic profit. Suppose that the chemical plant could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the campground would no longer be affected. If the chemical plant uses the recycling method, then the chemical plant's economic profit is $1,500 per week, and the campground's economic profit is $2,800 per week. If the chemical plant does not use the recycling method, then the chemical plant's economic profit is $2,300 per…
- 1. Assume there are two competing uses, municipal and agricultural, for a fixed amount of water Q = Qm + Qa = 100 acre-feet. The water demand curve for municipal use is given by 100- 2Qm and for agricultural use P = 50-0.5Qa. Because of the way water rights have been allocated in the past, the city is currently consuming Qm applying Qa = 90 acre-feet of water to farms. (a) municipal use? What are the marginal and total values of water for agricultural use? (b) we reallocate 1 acre-foot of water from agriculture to the city, what is the net gain? (c) (d) municipal use? What are the marginal and total value of water for agricultural use? What is the total net gain compared to the current allocation? (e) allocation, which price range will benefit both sectors? %3D %3D P = = 10 acre-feet of water while irrigators are Under the current allocation, what are the marginal and total values of water for Suppose that the cost per acre-foot of delivering water to the two uses is the same. If Find…Side 19 A mine owner faces the following marginal cost (MC) function: MC= 100 +15*X Where X is tons of the mineral extracted The mining of the mineral has external costs. The marginal external cost (MEC) has the following function: MEC = 5*X Where X is the tons of the mineral extracted. The (marginal) price curve (PC) has the following function: PC= 600 -5*X Where X is tons of the mineral the bought What is the optimal extraction level in tons? Vælg én svarmulighed O 15 O 18 O 23 O 208-1. Consider a piece of land covered by old-growth forest which could potentially be cleared and converted to agricultural use. The marginal benefit MB, the marginal private costs MC and the marginal external costs MEC of converting an area r of land are: MB(x) 10 – x MC(x) 3 MEC(r) (a) Represent the situation in a diagram and explain in economic terms why the ex- ternality associated with land conversion leads to market failure, i.e. to a market equilibrium that is not socially optimal. (b) Determine analytically (i) the equilibrium allocation that results from individual utility maximization, (ii) the socially optimal allocation that results from consider- ing the full social costs, and (iii) compare both allocations. (c) Explain graphically and analytically how a regulator could solve the market failure by either (i) imposing an upper limit on land conversion or (ii) levying a Pigou- vian tax on land conversion, and determine the limit and the Pigouvian tax rate, respectively.