Assign8 - James E. Pesando Economics 100 Assignment #8...

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James E. Pesando Economics 100 Assignment #8 Factors of Production, Market Failure, Externalities 1. Assume that the market for new homes is perfectly competitive. Illustrate, using diagrams, how a tax imposed on the buyers of new homes will affect (1) the demand for construction workers and (2) construction wages. 2. The manufacture of trucks produces pollution of various kinds. Producing a truck creates one unit of pollution, and pollution has a cost to society of $3,000. The market for trucks is competitive, and market supply and demand are given by the following data: Price (thousand $) 50 51 52 53 54 55 56 Quantity supplied 560 640 720 800 880 960 1,040 Quantity demanded 800 760 720 680 640 600 560 (1) Graph the demand curve and the supply curve for the industry. What are equilibrium price and output? (2) Graph the social marginal cost curve. Will the private market outcome be allocatively efficient? Explain. (3)
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This note was uploaded on 02/29/2012 for the course ECON 101 taught by Professor Unknown during the Fall '10 term at University of Toronto.

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Assign8 - James E. Pesando Economics 100 Assignment #8...

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