Government,the firm & the Market

1. Government, the Firm and the Market

4. External costs in production O Costs and benefits Quantity Q 1 MC = S D P

5. External costs in production O MC = S D P MSC Costs and benefits Quantity Q 1 External cost Q 2 Social optimum

7. External benefits in production O D P MC = S Q 1 Costs and benefits Quantity

8. External benefits in production O MSC D P Costs and benefits Quantity MC = S Q 1 External benefit Q 2 Social optimum

9. O MC = S D P Q 1 Q 2 Costs and benefits (£) Quantity MSC (a ) External costs O D P Q 2 Q 1 Costs and benefits (£) Quantity MSC MC = S (b) External benefits External costs and benefits in production External cost External benefit

16. A monopolist producing less than the social optimum O £ Q MC 1 Q 1 MC MR AR P 1 Monopoly output

17. A monopolist producing less than the social optimum O P 1 MC 1 MC = MSC Q 1 MR AR = MSB Q 2 P 2 = MSB = MSC £ Q Monopoly output Perfectly competitive output

21. Using taxes to correct a market distortion O Costs and benefits Quantity Q 1 MC = S D P

22. Using taxes to correct a market distortion O MC = S D P MSC Costs and benefits Quantity Q 1 External cost Q 2 Social optimum

23. Using taxes to correct a market distortion Q 1 O P Costs and benefits Quantity MC = S MSC D Q 2 MC Optimum tax = MSC – MC

29. Types of environmental taxes and charges

30. Types of environmental taxes and charges

31. Types of environmental taxes and charges

32. Types of environmental taxes and charges

36. Profit maximising under monopoly £ Q O Q m MR MC

37. Profit maximising under monopoly £ Q O MC Q m MR AC AR AC AR Total profit