Suppose the total benefits of cement production are TB = 180q-q and the total costs of...

 

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Suppose the total benefits of cement production are TB = 180q-q and the total costs of cement production are TC=q. Suppose the total external cost of cement production is TEC = 30q. 1. (2 points) What is the level of production that would be produced in a competitive market? 2. (2 points) What is the efficient quantity? 3. (2 points) What would be the magnitude of the efficient Pigouvian tax in a competitive market? 4. (2 points) Derive the monopolist's marginal revenue curve. 5. (2 points) How much does the monopolist produce? 6. (2 points) What is the magnitude of the efficient Pigouvian tax amid monopoly? 7. (2 points) Now suppose the total external cost is given by TEC = 90q. What is the efficient tax on the monopoly? Why does your answer differ from (6) above. Suppose the total benefits of cement production are TB = 180q-q and the total costs of cement production are TC=q. Suppose the total external cost of cement production is TEC = 30q. 1. (2 points) What is the level of production that would be produced in a competitive market? 2. (2 points) What is the efficient quantity? 3. (2 points) What would be the magnitude of the efficient Pigouvian tax in a competitive market? 4. (2 points) Derive the monopolist's marginal revenue curve. 5. (2 points) How much does the monopolist produce? 6. (2 points) What is the magnitude of the efficient Pigouvian tax amid monopoly? 7. (2 points) Now suppose the total external cost is given by TEC = 90q. What is the efficient tax on the monopoly? Why does your answer differ from (6) above.

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In a competitive market the level of production would be determined by equating the marginal benefit MB to the marginal cost MC MB TB dTBdq d180q q2dq ... View the full answer