b. What is the social optimal quantity and price?

題組內容

III. Short Answer Questions (簡答題)(50%)
1. (15%)Suppose that the inverse market demand curve for cloth is P = 150 2Q, the private marginal cost (unregulated competitive market supply) is $MC^p = 75 + Q$, and the marginal damage from pollution is $MC^d = 2Q$.

2. (10%)Consider the Solow growth model without technological change. The production function is $Y = K^{1/3}L^{2/3}$, where K and L represent the total capital and workers used, respectively. The parameters of the model are given by s = 0.36 (savings rate) and d = 0.04 (depreciation rate). Let k denote capital per worker; y output per worker; c consumption per worker; i investment per worker. Find the steadystate level of the capitallabor ratio, $k^*$, if the population grows at fixed rate n = 5%.

題組內容

b. What is the social optimal quantity and price?

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