Suppose that at market equilibrium, the marginal private benefit is $47 and the marginal social benefit is $84. The market equilibrium is at a quantity of 23 and the efficient quantity is 32. What is the value of the deadweight loss resulting from the underproduction of this good? Do not include the $ in your answer.

Suppose that at market equilibrium, the marginal private benefit is $47 and the marginal social benefit is $84. The market equilibrium is at a quantity of 23 and the efficient quantity is 32. What is the value of the deadweight loss resulting from the underproduction of this good? Do not include the $ in your answer.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...

See similar textbooks

Similar questions

Use appropriate figures to show the deadweight losses associated with a) positive externalities b) negative externalities (in a perfectly competitive goods market)
Policymakers are provided data about the private and social benefits of a good being sold in the market. Quantity Private MB ($) Social MB ($) 4 9. 5 4 7 6. 2 5 7 3 What is the size of the externality? If the externality is positive, enter a positive number. If negative, make it a negative number. Enter numeric value Given this data, policymakers must decide whether to address the associated externality with a subsidy or a tax. As their economic consultant, which of the two policy tools would you recommend? a subsidy a tax
Price per bin 120 110 100 90 80 70 60 50 40 30 20 10 $800 $900 $450 1 $1250 1 I 1 + V D The figure represents the market for apples. Assume there are no externalities. Suppose a sales tax of $40 per bin of apples is levied on consumers of apples. The after-tax supply curve is labeled S+t. What is the dollar amount of the REVENUE collected by this tax? To review this concept, see the section Taxes and Efficiency. S+t S 10 20 30 40 50 60 70 80 90 100 Bins of apples
Consider the graph illustrating the supply, the demand, and the marginal social benefit (MSB) curves for one year of a university education. 1.Value of subsidy per student is... 2. New price is...
A market for a good contains a negative production externality. The following functions describe the market: MPB = 171 - 0.15Q MPC = 13 + 0.1Q MEC = 19 Currently there is no tax. Calculate the benefit if the government adds a tax of $8 per unit.
Use the shaded triangle to show the deadweight loss associated with the external benefit depicted on the graph. Deadweight loss Supply Demand (social) Demand Quantity Price ($)
Use your demand schedule for a public good, determined in question 1, and the following supply schedule to ascertain the optimal quantity of this public good. Why is this the optimal quantity?
Explain why there are no markets for public goods briefly.
Assume there is a positive externality associated with having a tertiary education. Is the deadweight loss from the subsidy increased or decreased with the introduction of the positive externality? Why?
Below is the the market demand curve for yard leaf cleaning when only the marginal private benefits (MPB) that the homeowners receive from the clean yard are taken into account. If the government provides a subsidy to yard cleaning companies, equal to $10 per yard, the demand curve will shift and become the same as the marginal social benefit curve (MSB). Move the demand curve to illustrate that. Provide your answer below: Supply 2- Demand 2 4 8 Number of yards (in hundreds) Price per yard (in tens)
The graph shows the marginal private benefit from a veterinary degree and the marginal cost of obtaining it. The marginal external benefit is $8,000 per veterinary graduate per year. Suppose the government decides to subsidize private veterinary schools. Draw the marginal social benefit curve. Label it MSB. Draw the supply curve when the government provides a subsidy that achieves the efficient number of students. Label it S - MC. Draw an arrow to show the subsidy per student at the efficient number of students. The subsidy that achieves the efficient number of students is $ student. >>> Remember that the quantity given on the y-axis is in thousands of dollars. Oll 70 y Selected: none & 7 O * 8 per 0 * ✓ O 9 40- 32- 24- 16- 8- 0- 0 Price and cost (thousands of dollars) 4 F 10 40 30 Students (thousands per year) >>> Draw only the objects specified in the question. Delete Clear Р 20 +S=MC ? D=MB 50 Next 18 X SU 10
Let Q be the quantity of natural gas in tons from fracking. Assume fracking imposes a negative externality of $24 per ton. The private demand for natural gas from fracking is P = 200 - 4Q while the private supply curve is P = 20 + 2Q. If the government imposes a $24 tax per ton of natural gas from fracking, what is the change in the total surplus from before to after the imposition of the tax? O -$672. O $48. O $672. -$48.