ECON 203 Study Guide - Quiz Guide: Deadweight Loss, Conspicuous Consumption, Economic Surplus
23 Mar 2019
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1 is, the: less likely the deadweight loss will be affected. smaller the deadweight loss. larger the loss in consumer surplus. larger the deadweight loss: a market failure/inefficiency exists when: Short questions: multi-lever company producers glayde, a popular room deodorizer. Unfortunately, the production process releases sulfur dioxide into the atmosphere. The marginal private cost (mc) of producing glayde is mc=qs, The demand curve for glayde (there are no external benefits) is p=12-0. 5qd. (i) Ans: q=6, p=9 (iii) compare and describe the unregulated market quantity and price with the allocatively efficient quantity and price. Ans: the unregulated market produces too much and the product sells at a price too low. (iv) the government wants to impose a tax on glayde to achieve the allocatively efficient quantity of output. Ans: the tax should be set such that output is 6 units. This means the tax should be in order to get q=6 and pc= and pp=.
