(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
This question is going to ask you to find the volume levels that are likely to occur in private and social optimal equilibrium.
The table provides the volume of music in decibels, the marginal social benefit and the marginal social cost of increasing the music volume.
(Description)
The table provides the volume of music in decibels in the first column. The values start from 90 to 97 in single increments. The second column provides the marginal social benefit of increasing the music volume. The values start from 36 and decreases to 0 in multiples of 6. The third column provides the marginal social cost of increasing the music volume. The values start from 0 up to 12 in increments of 2.
The following text is briefly written above the table:
The loud music coming from the sorority next to your dorm is a negative externality that can be directly quantified. The accompanying table shows the marginal social benefit and the marginal social cost per decibel (dB, a measure of volume) of music.
The following text is briefly written below the table:
a. What is the socially optimal volume of music (hint: it may help to draw a graph)?
(Speaker)
We are going to start by drawing the x and y-axis.
(Description)
The coordinate plane with the horizontal x-axis and the vertical y-axis is drawn. The horizontal axis is labeled as Volume of music. It is measured from 91 to 97 decibels in increments of 1. The vertical axis is labeled as Marginal social cost, marginal social benefit of decibels. It is measured from 3 to 36.
(Speaker)
Next, we are going to draw the marginal social benefit line.
(Description)
Points, corresponding to the data in columns, the marginal social benefit, and, the volume of music in decibels, are plotted on the coordinate plane. A straight downward sloping line connecting these points is drawn. It is labeled as MSB.
(Speaker)
You'll notice that the x values are the midpoint between each volume level. We are using this midpoints as the marginal social benefits and marginal social costs fall between the two decibel levels.
The marginal social cost line is upward sloping, which reflects an increasing cost to society of playing the music music at a higher volume level.
Lines, MSB, and, MSC, intersect at point with coordinates, 95 and 9.
(Description)
Points, corresponding to the data in columns, the marginal social cost, and, the volume of music in decibels, are plotted on the coordinate plane. A straight upward sloping line connecting these points is drawn. It is labeled as MSC.
(Speaker)
Again, you will notice the x values are the midpoint between each volume level. Equilibrium will be the intersection of the marginal social benefit and the marginal social cost line.
(Description)
There are 2 dotted lines drawn from points, 95 decibels, on the horizontal axis, and from point, 9, on the vertical axis. The first dotted line is parallel to the vertical axis, the second dotted line is parallel to the horizontal axis. These lines intersect at a right angle at point with coordinates, 95 and 9.
(Speaker)
The sorority will choose the point where marginal private benefit equals marginal private cost explicit, which would be where the marginal private benefit is zero, since the marginal cost to the sorority is also zero.
You should also note that the marginal social benefit is equal to the marginal private benefit since we are assuming only the sorority derives benefit from the music.
Equilibrium will occur at a volume of 95 decibels.
(Description)
Point with coordinates, 95 and 9, is highlighted as Equilibrium occurs where the MSB equals MSC.