Economics?

[2bsy2njoy]

Are there any Economic pros in here?

[Karin78]

Oh boy.  I don't know of anyone who specifically listed economics as an area of expertise.  Do you have a specific question?  I'm sure there's someone here who can help.

[2bsy2njoy]

Here it goes...

Supply: Q= 5000 P where Q is tons supplied per year and P is the price per ton.

Demand: Q= 400,000-1000 P where Q is tons demanded per year

Because of the pollution associated with paper production, there are marginal external costs of $20.00 associated with each ton of paper.

A. Find the market Equilibrium and quantity

B. Find the Efficient Equilibrium and quantity

Because it has quantity and price opposite of how she showed us in class its confusing me. To find efficiency I would set the 2 equations equal to each other and solve for Q and then add it back to one of the equations to get the quantity. I may just be making it harder than it supposed to be but I am confused.

So I think the Mkt Equilibrium would be this:

5000P=400,000-1000P

6000P=400,000

P=66.67

Which Q would = 333,333

then Efficient Equilibrium would be:

5000p +20=5020

5020P+400,000-1000P

6020P+400,000

P=66.45

Q=333,550

 

Does anyone have any suggestions?

[SoupIsGoodFood]

I am pretty sure that your first answer is correct.

I am very sketchy about the second answer, I tried it this way, but I am not sure:

5000(P + 20) = 400,000-1000(P + 20).... assuming there would be a $20 necessary increase in the price per ton?

So the answers I received when solving for p and q are $46.67 and 333,350 respectively.

So, hopefully that helps a little, if I get a brain jolt tonight (I've been out of ECON for 5 years) then I will repost.

 

Brandi