Scenario: Vacant houses, foreclosed or abandoned, are typically boarded up with plywood that many people consider unsightly and likely to invite vandalism. An alternative is clear plastic (polycarbonate) panels. The figure below shows the demand and the supply of polycarbonate panels used for boarding up houses in a hypothetical town. To answer some of the questions below, it will be useful to find the equations of the three lines in the figure.

-Refer to the scenario above.If only the private marginal benefits are taken into account,then ________ panels will be bought at ________ per panel.Use the equations for the demand and the supply curves.

Question

Scenario: Vacant houses, foreclosed or abandoned, are typically boarded up with plywood that many people consider unsightly and likely to invite vandalism. An alternative is clear plastic (polycarbonate) panels. The figure below shows the demand and the supply of polycarbonate panels used for boarding up houses in a hypothetical town. To answer some of the questions below, it will be useful to find the equations of the three lines in the figure.
 
-Refer to the scenario above.If only the private marginal benefits are taken into account,then ________ panels will be bought at ________ per panel.Use the equations for the demand and the supply curves.

Quizplus · Accepted Answer

The correct answer is A because the demand curve is given by Qd = 100 - P, and the supply curve is given by Qs = 50 + P. If only the private marginal benefits are taken into account, then the demand curve will shift to the left, and the new equilibrium will be at Q = 70 and P = $70.

Scenario: Vacant Houses, Foreclosed or Abandoned, Are Typically Boarded Up