Consider the market for a specific fruit product $($GrapplesTM$)$ where the demand is given by:

QD $=10,000400$P

The inverse supply $($i$.$e$.$ "Private Marginal Cost"$)$ is:

PMC $=5+0\mathrm{.}0075$Q

The production of Grapples uses large amounts of fertilizer which results in runoff and damage to the water in adjacent rivers and streams. $$The marginal cost of this pollution is given by the Marginal External Cost equation:

MEC $=0\mathrm{.}0025$Q

Grapple producers are not liable for these harms and so ignore them in their production decisions.

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Flag question: Question $1$

Question $11$ pts

What is the inverse demand equation $($AKA "private marginal benefit"$)?$

Group of answer choices

P$=250\mathrm{.}0025$Q

P$=10400$Q

P$=400040,000$Q

P$=10,000-400$Q

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Flag question: Question $2$

Question $21$ pts

Find the competitive equilibrium Quantity of Grapples. $$

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Flag question: Question $3$

Question $31$ pts

Find the competitive equilibrium Price of Grapples.$$

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Flag question: Question $4$

Question $41$ pts

Find the Consumer Surplus in equilibrium

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Flag question: Question $5$

Question $51$ pts

Find the Producer Surplus in equilibrium

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Flag question: Question $6$

Question $61$ pts

What is the total external cost in equilibrium?

Hint: The$$total external cost is the area below the$$marginal external cost curve.

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Flag question: Question $7$

Question $71$ pts

When accounting for the external cost, what is the efficient quantity of output in the market?

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Flag question: Question $8$

Question $81$ pts

What is the Deadweight Loss created by the externality?

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Flag question: Question $9$

Question $91$ pts

In order to reduce pollution, the government decides to tax Grapple growers. $$The tax is set as a per$-$unit $($per Grapple$)$ amount. $$

What tax per grapple will result in the efficient outcome?

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Flag question: Question $10$

Question $101$ pts

What is the deadweight loss in the market after the tax is instituted?

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Flag question: Question $11$

Question $111$ pts

Suppose that the government doesn't impose a tax on the market. $$Instead$,$ the government allows a monopoly to form. $$The monopoly has the same private marginal cost as the market supply given earlier.

How many Grapples would a monopoly produce?

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Flag question: Question $12$

Question $121$ pts

Is the monopoly producing the efficient level of output?

Group of answer choices

Yes, because the monopoly will take into account the external cost when choosing the quantity of grapples to sell

No$,$ the monopoly produces more than the efficient quantity

Yes, the output of the monopoly is the same as the efficient quantity

No$,$ the monopoly produces less than the efficient quantity