Question
Answered step-by-stepAsked by AgentExplorationRabbit8 on coursehero.com
pls show using graphs as well. Suppose that we are considering the...
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Suppose that we are considering the market for windmills. The private demand for windmills is
given buy: Q = 14-0 — 2p
And the private supply ofwindmills is given by:
Q = p — 10 Suppose also that windmills produce a positive externality, with a Marginal Economic Benefit of
$20 per unit. 5. What would be the private market equilibrium (p' & (1*)? Show vourwork. [2 points]
6. What is the socially optimal equilibrium (p* 8: Q')? Show vourworlc. [3 points] When we consider the total surplus created by a product with a positive externality, the
relevant demand curve for measuring Consumer Surplus would be the Social Demand Curve. 7. What is Producer Surplus and Consumer Surplus in the private market equilibrium?
[2 points] 8. What is the increase in Total Surplus from moving from the private market equilibrium
to the socially optimal equilibrium? [2 points]
pls show using graphs as well
Answer & Explanation
Solved by verified expertAnswered by EconTutor07 on coursehero.com
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