sity Home Quiz: ACQ #4 selection + & https//dominicanu instructure.com/courses/9
ID: 1138698 • Letter: S
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sity Home Quiz: ACQ #4 selection + & https//dominicanu instructure.com/courses/924039/quizzes/1853150/take D Question 3 Refer to the figure below. In this case, the private market.resources efficiently because 300 250 8 200 150 100 50 Social MC Private MC 0 100 200 300 400 500 600 Quantity (tons of paper per year) O does not allocate; demand and supply do not cross at the market equiibrium allocates; firms are motivated to maximize proft O does not allocate: some of the costs of paper production do not fall on producers O allocates: consumers are willing to pay the external cost of production 4 pts D Question 4 0 rchExplanation / Answer
1. allocates; firms are motivated to maximise profits.
2. intersect the vertical axis at 70 and horizontal axis at 35.
MR cuts horizontal axis at half of its value as demand curve does and intersect at same point of demand curve.
3. 100; 80
Equilibrium quantity is where MR = MC and equilibrium price is where intersection of MR and MC meets the demand curve.
8. DWL = 1/2 x (80 - 40) x (150 - 100) = 1/2 x 40 x 50 = 20 x 50 = 1000
Answer is a) 1000
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