Homework answers / question archive / 1)MSc 5 15 p (1601) & MPC (200,10) - MPB eg a 600 On your diagram show, graphically, how a Pigouvian tax could work if a tax of $2 were to be imposed on the producers

1)MSc 5 15 p (1601) & MPC (200,10) - MPB eg a 600 On your diagram show, graphically, how a Pigouvian tax could work if a tax of $2 were to be imposed on the producers

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1)MSc 5 15 p (1601) & MPC (200,10) - MPB eg a 600 On your diagram show, graphically, how a Pigouvian tax could work if a tax of $2 were to be imposed on the producers. (Do so by copying and pasting your earlier diagram below and showing the new curve). [1 mark] (b) Using your diagram (at 2(b) above) and letters (A, B, C & D.) show the following areas after the tax: (i) the consumer surplus (A); (ii) the producer surplus (B); (iii) government revenue (C); and (iv) deadweight loss (D).

2)Read the following three statements: 41 a) Innovation and creativity are key drivers of an entrepreneur. b) The complaints of family, friends and colleagues regarding products and poor service can be a source of business ideas. c) Trade fairs and exhibitions are potential sources of business ideas. Which statement/s is/are correct? [1] a [2] b and c [3] a and c [4] a, b and [5] None of the options (1, 2, 3 or 4) is correct.

3)Determines the scale yields associated with the technology described by the production function Q = 1/2" in terms of parameter b.

Refer to Exhibit 4-5. Suppose the government imposes a price ceiling at P = $0 for transplanted kidneys. The result will be a

Group of answer choices

surplus of kidneys equal to (Q₂ - Q₁).

surplus of kidneys equal to (Q₃ - Q₁).

shortage of kidneys equal to (Q₂ - Q₁).

shortage of kidneys equal to (Q₃ - Q₁).

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1)Based on the figure-2(b) presented in the question and in the document attached below, the welfare impact of the Pigouvian tax of $2 has been illustrated in the market. In figure-2 the y and the x axes represent the price and quantity or P and Q respectively. Prior to the imposition of the tax, the initial Marginal Private Benefit or MPB and the Marginal Private Cost are lebaled as MPB and MPC curves in the figure and the Marginal Social Cost or MSC following the imposition of the tax has been labeled as MSC curve. The initial equilibrium price and quantity before the tax imposition are 10 and 200 corresponding to te intersection of MPB and MPC curves and the new equilibrium price and quantity are 11 and 160 corresponding to the intersection of MPB and MSC curves after the tax imposition.

(b) Now, following the imposition of the Pigouvian tax of $2 in the market the consume surplus is indicated by the area or triangle A in figure-2(b), the producer surplus is denoted by the area or triangle B, the total tax revenue collected by the government is indicated by area or rectangle C, and the deadweight loss in the market due to the tax imposition is indicated by the smallest triangle D.

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answer 2.https://drive.google.com/file/d/1hPjfuJeCXH3UGJRgTSdgoaeyLwMX8zTQ/view?usp=sharing

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Let Q be the production function,

We augment the Q to a factor "t"
f(tL, tK) = t * f(L, K)
If $\alpha +\beta$ = 1 , the f(L, K) exhibits Constant Returns to Scale (CRS)
If $\alpha +\beta$ > 1 , the f(L, K) exhibits Increasing Returns to Scale (IRS)
If $\alpha +\beta$ < 1 , the f(L, K) exhibits Decreasing Returns to Scale (DRS)

Given production function,

Q = K^0.5L^b = F(K, L)

augmenting by factor $\lambda$

F( $\lambda$ K, $\lambda$ L) = ( $\lambda$ K)^0.5*( $\lambda$ L)^b

= $\lambda$ ^0.5+b * F(K, L)

CASE 1:

If b = 0.5

then, $\alpha +\beta$ = 0.5 + 0.5 = 1, the the technology exhibits Constant Returns to Scale (CRS)

CASE 2:

if b > 0.5

then, $\alpha +\beta$ > 1, the the technology exhibits Increasing Returns to Scale (IRS)

CASE 3:

if b < 0.5

then, $\alpha +\beta$ < 1, the the technology exhibits Decreasing Returns to Scale (IRS)

Answer)

Shortage of kidneys equal to (Q2 - Q1)

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1)MSc 5 15 p (1601) & MPC (200,10) - MPB eg a 600 On your diagram show, graphically, how a Pigouvian tax could work if a tax of $2 were to be imposed on the producers

Economics