125% EB A View Zoom Add Page Insert Table Chart Text Shape Media Comment Collaborate Format Document 1. The demand and supply for a product is given by: Demand: P=210- Q Supply: P= 50 + 4Q Each unit produced generates a marginal external cost of 40. a. Find the unregulated market equilibrium price and quantity. b. Find the efficient level of output. c. Find the deadweight loss that occurs at the unregulated market equilibrium. d. What tax per unit would achieve the socially optimum level of output? e. How much revenue would the tax raise? 2. Demand and supply for Z are given by: Demand: Q =55 -5P Supply: P= 1+.3Q Production of Z generates an external cost of : MEC = .5Q a. Find the MPB of the 10th unit. b. Find the unregulated equilibrium price and quantity. c. Find the MSC of the 20th unit. d. Find the efficient level of output e. Find the deadweight loss if nothing is done to correct the externality problem f. Draw D, MPC and MSC in the same diagram. Put in the numbers for the equilibrium output and price, the efficient output and shade in the deadweight loss. g. What Pigouvian tax policy would bring about the efficient level of output? h. How much revenue does the tax generate? 3. True or false and briefly explain a. "Negative externalities result in an efficiency loss, but positive externalities result in an efficiency gain." b. "If MSC is greater than MSB at a particular quantity, then too little is being produced." Nothing selected. c. " The purpose of a Pigouvian tax is to raise revenue to compensate those who were made worse off Select an object or text to format. from the externa 4. How would the size of a corrective tax for a negative externality be affected if the firm were also a monopolist? 5. Assuming no externalities, explain why producing at an output level in which P> MC is considered inefficient