Price$240$220$200$180$160$140$120$100$80$60$40$20S-MCMCQuantity of pediatrician visitsDudy-110D$30MToolsOWLOWL©a. Assume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is:350 visitsb. Compared to the efficient outcome, graph the deadweight loss that would result from subsidies of $30 or $90.Instructions: Use the tools provided "DWL 30' and 'DWLgo' to illustrate the deadweight loss for each subsidy. Drag the points to moveor resize.

Marginal benefit is the gain earned by consumers by additional buying of goods. By buying more the…

Price $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 S-MC-MC MB 6 4 6 4 4 4 5 %% Quantity of pediatrician visits p -110 0 Tools OWL owl. ssume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is 350 visits

Price $240 $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 S-MC-MC MB 6 4 6 4 4 4 5 %% Quantity of pediatrician visits p -110 0 Tools OWL owl. ssume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is 350 visits

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter5: Difficult Cases For The Market And The Role Of Government

Section: Chapter Questions

Problem 10CQ

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Question

Price
$240
$220
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
S-MCMC
Quantity of pediatrician visits
Dudy-110
D$30
M
Tools
OWL
OWL
©
a. Assume that the correct level of subsidy is $60. The socially optimal level of pediatrician visits is:
350 visits
b. Compared to the efficient outcome, graph the deadweight loss that would result from subsidies of $30 or $90.
Instructions: Use the tools provided "DWL 30' and 'DWLgo' to illustrate the deadweight loss for each subsidy. Drag the points to move
or resize.

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Step 1: Define marginal benefit and marginal cost

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Step 2: Explain the social optimal quantity

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Step 3: Illustrate the deadweight loss

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