This an old problem set. No additional information is need other than what's given

(g) Consider the competitive equilibrium you found in part (d). Compute the Marshallian aggregate surplus in this equilibrium, taking the pollution into account. (h) Is Marshallian aggregate surplus in (g) greater or less than your answer in (f)? (You should use a calculator to answer this question) Why is your answer different from that to (e)? 2. Consider a mark ket with aggregatePage 1 of 2 1. Consider a two-good quasilinear economy with the following specifications. The two goods are good I and the numeraire good. There are I = 2 consumers, each of which has the same utility function: u(xi, mi)= In(1+I;)+mi, where r; is consumer i's consumption of good , and m; is his consumption of the numeraire good. There are J=8 firms, each of which has the same cost function: c(q;) = q,. Suppose that the initial endowment of the numeraire good is wi = 1 for each consumer, so that the total endowment w=2. (There is no initial endowment of good l.) (a) Derive the demand function of good I for each consumer and the supply function of good for each firm. (b) Derive the aggregate demand function and the aggregate supply function of good l. Also, derive the inverse aggregate demand function and the inverse aggregate supply function. (c) Find the competitive equilibrium, and compute the Marshallian aggregate surplus in this equilibrium. (d) Suppose that the government impose a tax of 12 $ per unit on the firm. What is the competitive equilibrium under this tax? What is the Marshallian aggregate surplus now? (e) Is Marshallian aggregate surplus in (d) greater or less than your answer in (c)? (You should use a calculator to answer this question) Suppose now that the production of good / pollutes the environment, so that for each unit produced, the numeraire good in the economy is reduced by 12 unit. However, this additional cost is incurred on the entire society and is not directly borne by individual firms; consequently, it does not change the cost function in the firm's profit maximization problem. This means that the competitive equilibrium price and quantity for good I will not change. (f) Consider the competitive equilibrium you found in part (c). Compute the Marshallian aggregate surplus in this equilibrium, taking the pollution into account