Question
Consider the following model for the production of refined oil: MPC = 10 + 0.2 Q ; In the process of producing, firms also pollute
Consider the following model for the production of refined oil:MPC= 10 + 0.2Q;
In the process of producing, firms also pollute the air in the area. AssumeMEC= 0.3Q;
The market demand for refined oil isMSB= 30 - 0.3Q;MEB= 0.
- Calculate the refineries' marginal profit at the efficient equilibrium.
- Calculate the public marginal damage (negative benefit) at the competitive equilibrium.
- At Q=30, what is the minimum price (Pm) refineries would have to be compensated in order to decrease production? What would be the maximum price (PM) public users would be willing to pay to have production decreased?
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Marketing
Authors: John McMurry, Robert Fay
13th Edition
125973806X, 9781259738067
