Great Deal! Get Instant \$10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

# (1) You can hand write or type your answers as you prefer. In the end, you need to submit either a pdf file (strongly preferred) or images of answers to individual questions of your assignment...

(1) You can hand write or type your answers as you prefer. In the end, you need tosubmit either a pdf file (strongly preferred) or images of answers to individual questions of your assignment responses.

(2) I suggest that you write your response toEACH question on a SEPARATE sheet of paper.

(3) We willdeduct 2-5 points if you fail to follow these instructionson writing answers on separate sheets and, more importantly, if you do not clearly mark out the page number of the answers as requested by GradeScope during the time of your submission.

(4)All assignments and quizzes must be submitted by the announced submission deadline for full credit. After that deadline thislate submission policywill apply:5 points will be deducted for each day's delay for up to 2 days, after which no more submissions will be accepted.

Answered Same Day Mar 11, 2022

## Solution

Komalavalli answered on Mar 12 2022
Question 1
a)
Neighborhood 1: Marginal benefit and Demand curve
Neighborhood 2: Marginal benefit and Demand curve
)
Neighborhood 1:
At optimal point MD1=MB1
MD1 = P =MB1 = 8-P
P = 8-P
2P = 8
P = 4
Optimal quantity of pollution is 4 units for neighborhood 1
Neighborhood 2:
At optimal point MD2=MB2
MD2 = P =MB2= 4-P
P = 4-P
2P = 4
P = 2
Optimal quantity of pollution is 2 units for neighborhood 2.
c)
Social optimum level MD = MD1+MD1=MB = MB1+MB2
8-P+4-P = 2P
12-2P = 2P
12 = 4P
P = 12/4
P = 3
Social optimum level of pollution is 3 units.
The optimal level of pollution for both the neighborhood is different due to difference in marginal benefit curve and cost.
d)
Social surplus 1 = Â½*(4-3)*(5-4)
SS1 = Â½*(1)*(1)
Social surplus 1 =0.5
Social surplus 2 = Â½*(3-2)*(3-2)
SS2 = Â½*(1)*(1)
Social surplus 2 =0.5
Total welfare =SS1+SS2
Total welfare =0.5+0.5
Total welfare =1
e) P = 3
MD1 = P
MB1 = 8-P
Factory 1
MD1 = 3
MB1 = 8-3
MB1 = 5
l quantity of pollution is 5 units for factory 1
Neighborhood 2:
MD1 = P
MB1 = 4-P
MD2 = 3
MB2= 4-P
MB2= 4-3
MB2= 1
Optimal quantity of pollution is 1 unit for...
SOLUTION.PDF