cost associated with producing one kilowatt hour (kwh)
of electricity is $0.25, draw the marginal social cost curve
for this market.
b. What quantity of electricity will be produced and
consumed in the absence of government intervention in
this market? What will be the price?
c. What is the socially optimal price per kwh and quantity
consumed of electricity? Explain.
d. Explain how a special tax might be used to get electricity-
producing firms to produce the allocatively efficient level
of output.
13. Consider a small town deciding whether to build a public park.
The town council conducts a survey of its 100 residents and asks
them how much they would each value the park. The survey
results are as follows:
Number of people Value of park per person Total