$6.00 SOCIAL EFFICIENCY

• From Economics: Public-Finance
• Due on Oct. 26, 2008
• Asked on Oct. 24, 2008 at 01:21:18AM

Q:

CAN SOME EXPLAIN TO ME HOW TO SOLVE THE FOLLOWING. I ALOS NEED TO ISOLATE ( P )WHICH I CAN DO.

I Suppose there is a standard defensive driving course in California. Assume the demand for the course is Qd=10 - .06P, where Qd is yearly quantity demanded in California (in 1000’s) and P is the price of the course. The supply of the service is Qs=.1P.

A. Calculate the market equilibrium. (I HOW TO CALCULATE THIS ONE BY Qs=Qd, but the professor did it by isolating p. can someone help me)
Suppose that the external marginal benefit of the defensive driving course is $5.

C. Calculate the socially efficient equilibrium.

D. Calculate the increase in net benefits to society in moving from the market determined result to the efficient equilibrium.

 

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