econ_256_problem_set_9

# econ_256_problem_set_9 - Econ 256 Intermediate...

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Econ 256 Intermediate Microeconomics Professor Ranganath Murthy Bucknell University, Summer 2005 PROBLEM SET 9 Due July 20, 2005 (1) Suppose that the inverse demand curve for paper is Q P - = 200 , the private marginal cost ( i.e., the unregulated competitive market supply is Q MC p + = 80 , and the marginal harm from gunk is Q MC g = . (a) What is the unregulated competitive equilibrium price ( C P ) and quantity ( C Q )? What is the deadweight loss due to pollution? (b) What is the social optimum, i.e., find S P and S Q ? What specific ( or per-unit ) tax results in the social optimum? (2) There are three groups in a community. Their inverse demand for public television in hours of programming, T , are given respectively by T P T P T P - = - = - = 250 2 200 150 3 2 1 Suppose that public television is a pure public good that can be produced at a constant marginal cost of \$200 per hour. (a) How much public television would a competitive market provide? (b)

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econ_256_problem_set_9 - Econ 256 Intermediate...

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