A saw mill supplies lumber for a demand both depicted below. 

 $              Qd          Qs

 

 36            7              16

 

 34            8              14

 

 32            9              12

 

 30            10           10 28     11           8

 

1)What is equilibrium quantity? R: 10

 

a)What is equilibrium price? R: $30

 

The mill emits a saw dust smell that residents say that they are accustomed to but is ever-present. The cost of this smell is added in to the costs to make a new supply.

 

 $              Qd          Qs’

 

 36            7              10

 

 35            7.50       9

 

 34            8              8

 

 32            9              6

 

 30            10           4

 

2)If a tenth unit is now made, which is greater the cost or benefit represented by the demand price?

 

a)10th unit benefit-cost=?

 

b)9th unit benefit-cost=?

 

Questions #a and b combine for a deadweight loss of:

 

When cutting wood the saw mill emits a screeching that is nothing at low levels but quickly becomes intolerable. Now supply is depicted by:

 

 $              Qd          Qs”

 

 46            2              10

 

 44            3              9

 

 42            4              8

 

 40            5              7

 

 38            6              6

 

 36            7              5

 

 34            8              4

 

 32            9              3

 

 30            10           2

 

3)What is the new equilibrium quantity?

 

4)What is the new equilibrium price?10th unit benefit-cost=

Answer rating: 100% (QA)

The equilibrium quantity is 10 units a The equilibrium price is 30 If a tenth ... View the full answer