The following figure shows the market for steel. The demand…

The following figure shows the market for steel. The demand curve D crosses the private marginal cost of producing the steel (MCp) at Qm, Pm, and it crosses the social marginal cost function (MCs) at point Q*, P*. Why is there market failure at the private market equilibrium?

Assume that we have a fixed supply of a depletable resource…

Assume that we have a fixed supply of a depletable resource to allocate between two periods. The inverse demand function for the depletable resource is the same in each of the two periods, given as P = 8 – 0.4q, and the marginal cost of supplying it is $2. If 30 units are to be allocated between two periods, in a dynamic efficient allocation, how much would be allocated to the second period when the discount rate is zero?