1. Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used...

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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 residents of Toadhop live on the Quabache River, a river prone to flooding. 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?