Suppose you are the surgeon general and your task is to maximize the social utility of the population. to acccomplish this objective you have estimated the following equations:
(1) MSB = 140 - 0.1Qb; (1) is marginal social benefit equation
(2) MSC = 20+0.05Qc; (2) is marginal social cost equation
a. Graph these showing producer/consumer surplus, demand, supply or
whichever is needed
b. Using (1) and (2), find output (Q0) that you would choose to maximize TSNB?
c. What is the amount of TSNB?
d. Suppose that you choose 600 (QL) medical services instead. What is the
deadweight loss to society from this choice?
e. Suppose you choose 1000 (QR) medical services instead. What is the deadweight loss to society from this choice?
f. Assess the following statement as true or false and why? "Any output choice beyond the output choice that maximizes TSNB causes TSNB to be negative."
***Please answer in detail.
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The graph of the two equations is clearly depicted and studied.
The Market Equilibrium: Marginal Social Benefit/Cost
Suppose the marginal social cost of television sets is $100. This is constant and equal to the average cost of television sets. The annual demand for television sets is given by the following equation: Q = 200,000 - 500P2. If television sets are sold in a perfectly competitive market, calculate the annual number sold. Under what circumstances will the market equilibrium be efficient? See the attached file.View Full Posting Details