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Marginal social benefit

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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.

Thank you!!

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Solution Summary

The graph of the two equations is clearly depicted and studied.

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