25Q b If the market supply for the system were P 6 015Q what would be the

25q b if the market supply for the system were p 6

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0.25Q b. If the market supply for the system were P = 6 + 0.15Q, what would be the equilibrium price and quantity for the town? ( 2 points ) Suggested answer: Equate the market demand and market supply and solve, a s follows:
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20 0.25Q = 6 + 0.15Q 0.4Q = 14 Q E = 35 percent Substitute Q E into either equation to find P E as follows: 7 P E = 20 0.25(35) or 6 + 0.15(35) = $11.25 million (3) Page 7 7 of textbook: 5. (only a.) A New Hampshire textile mill releases pollution into nearby wetlands, and the associated health and ecological damages are not considered in the private market. Suppose you are an environmental economist working with the following marginal benefits and costs for this market, whe
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re Q is thousands of pounds and P is price per pound. MPB = 800 0.5Q MPC = 20 + 0.3Q MEB = 0 MEC = 0.4Q a. Find the competitive equilibrium, Q C and P C , and the efficient equilibrium, Q E and P E . ( 2 points ) Suggested answer: Competitive equilibri um is found where: MPB = MPC 800 0.5Q = 20 + 0.3Q 0.8Q = 780 Q C =
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975 thousand pounds P C = 800 0.5(975) or 20 + 0.3(975) = $312.50 Efficient equilibrium is found where: MSB = MSC MPB + MEB = MPC + MEC 800 0.5Q + 0 = 20 + 0.3 Q + 0.4Q 1.2Q = 7 80 Q E = 650 thousand pounds P E = 800 0.5(650) or 20 + 0.7(650) = $475 2. Using the theory of public goods, explain the logic of why in some resort communities the ownership of waterfront homes also includes some defined area along the beach. -This is done so that the homeowner has exclusive access to the area on the beach (by making them pay for the public good).
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This would help in conserving the beach area from excessive usage and degradation by the beach visitors (since beach area is a public good and can be used by everyone alike) So, by making the home owners pay and give them some beach area as private property, resort communities are in fact helping protect the beach area from excess use and exploitation.
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