Maurice Tutor

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Economics Posted 21 Jul 2017 My Price 4.00

effluent into streams

6.     The market for paper in a particular region in the United States is characterized by the following demand and supply curves:

 

QD  = 160,000  - 2000P   and   QS  = 40,000  + 2000P

 

where QD is the quantity demanded in 100-pound lots, QS is the quantity supplied in 100-pound lots, and P is the price per 100-pound lot. Currently  there is no attempt to regulate the dumping of effluent into streams and rivers by the paper mills. As a result, dumping is widespread. The marginal external cost (MEC) associated with the production of paper is given by the curve MEC  = 0.0006QS.

a.   Calculate the output and price of paper if it is produced under competitive conditions and no attempt is made to monitor or regulate the dump- ing of effluent.

b.    Determine the socially efficient price and output of paper.

c.    Explain why the answers you calculated in parts (a) and (b) differ.

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Maurice Tutor
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Status NEW Posted 21 Jul 2017 09:07 PM My Price 4.00

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