The market for paper in a particular region has the supply and demand curvesQ D = 160, 000 − 2, 000P and Q S = −40, 000 + 2, 000P,where Q is measured in hundred-pound lots, and P is price per hundred-pound lot.There is currently no attempt to regulate the dumping of effluent into streams andrivers by the paper mills. As a result, dumping is widespread. The marginal externalcost associated with the paper production is given by the expression M EC = 0.0002Q.(a) Calculate the competitive price and output, assuming that no attempt is madeto monitor or regulate the dumping of effluent.

The production of paper often creates a waste product that pollutes waterways. Assume the producer of paper does not directly pay to dispose of the waste in the water. In this case, the price of paper will be the socially efficient price and the amount of paper produced will be the socially efficient amount.

For a small country called Treetopia, the equation of the domestic demand curve for paper is QD = 210 − 2P, where QD represents the domestic quantity of paper demanded, in tons, and P represents the price of a ton of paper. For Treetopia, the equation of the domestic supply curve for paper is QS = –90 + 3P, where QS represents the domestic quantity of paper supplied, in tons, and P again represents the price of a ton of paper.Refer to Scenario 9-1. Suppose the world price of paper is $45. Then, relative to the no-trade situation, international trade in paperGroup of answer choicesbenefits Treetopian consumers by $1,575.00 and harms Treetopian producers by $1,518.75.benefits Treetopian consumers by $1,575.00 and harms Treetopian producers by $1,012.50.benefits Treetopian consumers by $2,362.50 and harms Treetopian producers by $1,012.50.benefits Treetopian consumers by $2,362.50 and harms Treetopian producers by $1,518.75.

If the retail price of a particular item produced by a firm is £P then the number of itemsthe firm is prepared to supply at this price is given by the equation1 92S P= −whilst the number D of items that customers will buy at this price is given by theequation136 3D P= −(a) Using the same axes draw graphs of D and S against P. Indicate the pointcorresponding to the situation when the supply S equals the demand D (that is,the market is in equilibrium) and determine the number of articles produced inthis case. Find also the selling price corresponding to the equilibrium state of themarket.(b) When the government levies a tax of £10 per item sold, the customers areconcerned only with the new total retail price £P, whereas the suppliers react asthough the price was £(P – 10).

Consider a competitive market in which the MPB = 178–4q and the MSC =3q. In this market, however, there is a positive consumption externality of $80 per unit consumed. What is the efficient level of output in this market?[Round your answer to two decimal places when needed]

On a piece of paper, draw a graph of the demand and supply of product X, and show the equilibrium in the market. (7 points)