Answer to Question #264295 in Microeconomics for Aaru

Question

With the onset of dengue in prolonged rainy season in Ahmedabad, there is high demand for

fogging (spraying mosquito repellents). The demand and supply of mosquito repellent spray is

given in the table below. Suppose there is an external benefit of Rs. 200 per spray of mosquito

repellent.

How much spraying would take place in the market? What is the efficient level of spraying? Discuss

ways to achieve the efficient level of spraying.

Price

(In Rs.

/Spraying)

Demand for mosquito

Repellent

Supply of mosquito

repellent

800 2 14

700 4 12

600 6 10

500 8 8

400 10 6

300 12 4

200 14 2

Answer 1

Solution:

The amount of spraying that would take place in the market is = 500

The efficient level of spraying is where demand = supply = 8

The efficient level of spraying can be achieved through effective production activities, use of technology and efficient use of resources.