(Solved) When peach canners process fresh peaches, they produce three products. The first, canned peaches, ...

When peach canners process fresh peaches, they produce three products. The first, canned peaches, is sold in the marketplace. The others, liquid and solid wastes, are by-products that must be removed. The liquid is sometimes temporarily kept in holding ponds and later released into a nearby stream or sewer. Liquid dumped in the stream represents a negative externality to downstream users. In the peach growing region, the marginal external costs of the canning process have been estimated as:
   MEC = 0.000043Q,
where Q represents output of canned peaches in cases per week. The marginal cost of canning peaches (ignoring MEC) is:
   MC = 2.00 + 0.000157Q,
and the demand for canned peaches is:
   P = 9.00 - 0.000243Q.

a.   How many cases of peaches will be produced per week during the growing season, and what will the selling price per case be if producers ignore the costs imposed on others?
b.   If producers are forced to incorporate the marginal external costs into their production decisions, what will the new production rate and selling price be?
c.   In taking account of the external costs imposed on others (part b), what was the impact on the selling price and production rate of canned peaches? Explain the impact on market efficiency.

Home Search Q & A Board Gallery Resource Library Blog Dictionary Chat	Quick Links Start a Topic Latest Topics Unanswered Questions Courses Study Tools Browse by Textbook	Social Facebook YouTube Community Stats Who's Online Trending Staff	Help About Us Take the Tour Study Tips Posting Guidelines Terms and Policies Contact Us
Biology Forums - Study Force © 2010-2024 \| Powered by SMF \| SMF © 2015, Simple Machines \| Sitemap Biology-Forums.com is not affiliated with any publisher. Book covers, title and author names appear for reference only.

When peach canners process fresh peaches, they produce three products. The first, canned peaches, ...

Microeconomics

Related Topics