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Price of steel

SMC = PMC + MD. Price of steel. S = PMC. p 2. p 1. MD. D = PM B = SMB. 0. Q 2. Q 1. Q STEEL. Price of cigarettes. S = PMC = SMC. p 1. MD. p 2. D = PMB. SMB = PMB - MD. 0. Q 2. Q 1. Q CIGARETTES. Price. S = PMC. SMC = PMC - EMB. p 1. EMB. p 2.

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Price of steel

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  1. SMC = PMC + MD Price of steel S=PMC p2 p1 MD D = PMB = SMB 0 Q2 Q1 QSTEEL

  2. Price of cigarettes S=PMC=SMC p1 MD p2 D=PMB SMB=PMB-MD 0 Q2 Q1 QCIGARETTES

  3. Price S = PMC SMC = PMC -EMB p1 EMB p2 D = PMB = SMB 0 Q1 Q2 Q

  4. SMC = PMC + MD Price of steel S = PMC p2 MD D = PMBSMB 0 1 2 Q2 Q1 QSTEEL

  5. SMC = PMC + MD Price of steel S = PMC p2 MD D=PMB=SMB 0 Q2 Q1 QSTEEL

  6. Socially efficient frontier (i.e. social welfare is maximized). Utility c d e a f b Utility

  7. SMC=PMC+MD Price of steel S=PMC+tax S=PMC p2 p1 D = PMB = SMB 0 Q2 Q1 QSTEEL

  8. Price of R&D S = PMC S = PMC – Sub SMC=PMC-EMB p1 p2 D = PMB = SMB 0 Q1 Q2 QR&D

  9. PR S=PMC=SMC MD = SMB $100 0 R* RFull QR More reduction More pollution

  10. PR PMCB PMCA PMCA + PMCB = SMC PMCB PMCA MD=SMB $100 0 RB R*/2 RA R* QR

  11. PR PMC2 PMC1 MD = SMB R2 R1 0 R3 RFull QR

  12. PR PMC2 PMC1 MD = SMB R2 R1 0 R3 RFull QR

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