Eco 202 Microeconomics II

1. Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. Calculate the market equilibrium quantity?

2. Calculate the price consumers would have to pay for the market to achieve the socially optimal level of production. [Hint: use QS = QS + tax but firms will receive a price P - t, therefore, QS = -100 + 100 (P-1). Find new equilibrium price]?

3. Calculate the market equilibrium quantity?

4. Calculate the tax revenue collected by the government?

5. suppose there are 1000 type A people who value flood control more than the 1000 type B people.type a demand QD = 100 p type b demand QD = 50 p where q measures the quality of flood control. if the price of a unit of flood control is $100,000 and the citizens of toadhop did not work together, what would be the amount of flood control purchased?

Please give full working with formula