Bond Whittaker

08/14/2023 · High School

NT: 1. A perfectly competitive market exists for wheat. The inverse demand is \( P=200-Q \) where \( P \) is the price of wheat and \( Q \) is the total quantity of wheat. The private total cost for the unregulated market is \( C=50+80 Q+0.5 Q^{2} \). The production of wheat creates an externc. where the total external cost is \( E=0.5 Q^{2} \). a. Solve for the unregulated competitive equilibrium of wheat and the socially optimal level of wheat. b. Derive the Pigouvian tax (per unit of output of wheat) that results in the social optimum. c. One big company, WheatsRUs, buys out all the farmers of wheat and becomes a monopolist. Using the same functional forms, solve for the unregulated monopoly equilibrium. d. Given the socially optimal level of wheat in (a), what is the optimaltax that should be placed on the monopolist?