0S: SB CQuantityS₁ and Dyrepresent the current market supply and demand, respectively 52 and D2 represent the socially optimal supply and demand. The positions of thegraphs indicate that there is (are) externalMultiple ChoiceD₂benefits from production and external costs from consumption of the productcosts from production and external benefits from consumption of the product.benefits from production and consumption of the productcosts from production and consumption of the product

Optimum supply and demand in the market refers to demand and supply in the market at that point of…

Answered: 0 8 C S: S Mutiple Choice D₂ Quantity…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The market for perfume is characterized by: MPB=200-Q and MPC= 3Q with a marginal social benefit of -$12 caused by the others smelling the perfume. The externality is ______ and on the _____ side of the market. The inefficient quantity is ______ and the price is _____. The allocatively efficient quantity in the market is ______. If the government were to correct the externality, it would _______ the market by $______ per unit of perfume. Word Bank: negative, demand, 50, 150, 47, tax, 12, positive, supply, subsidy
The equations below represent the demand and supply curves for annual gym memberships in a city. qD= 500 − 2p, qS=0.5p − 50 Because physical activity leads to better health, the city estimates that each annual gym membership saves $30 of public spending on healthcare per year (a positive externality). a. In a graph, show the market and the socially optimal equilibria for annual gym memberships in this city. Does the market equilibrium result in under- or over-consumption of memberships? What is the deadweight loss associated with the market failure in this situation? b. Would you recommend this city to implement a subsidy (a negative Pigouvian tax) to correct this market failure? If so, how much would be the subsidy per unit? What would be the effects of your proposed policy on the quantity, price, and aggregate welfare?
Consider the table. Number of street lamps 1 2 3 4 5 6 7 Marginal benefit (in $) 30 26 22 18 14 10 6 Suppose that a small town wants to install street lamps, which are nonrival in consumption and nonexcludable. Each of the 25 people in the town value street lamps according to the given schedule. Street lamps each cost $250 to install. Use this information to answer the questions. What is the socially optimal number of street lamps? street lampsstreet lamps Suppose that 20 of the 25 townspeople decide that they will not help pay for street lamps, and will instead enjoy (for free) the street lamps built by the other five people. What is the maximum number of street lamps that will be built by the remaining five people? street lampsstreet lamps Suppose the town government decides to build street lamps and pay for the street lamps through taxation. How much should each person be taxed to pay for the optimal number of street lamps if everyone is…
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The picture below displays a market with a negative production externality. Click on the socially optimal equilibrium point. p² pl 0 E2 RI o
1. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a v externality. The following graph shows the demand and supply curves for a good with this typé of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good.
(12) Consider a market with social marginal benefit (quantity demanded) given by SMB = 600 – Q and private marginal cost (quantity supplied) given by PMC = Q. Social marginal cost is given by SMC = 200 + Q. Assume SMB = PMB. (a) Graph these SMB, SMC, and PMC curves. (b) Find the market equilibrium price and quantity. (c) Find the socially optimal equilibrium price and quantity.
You are an industry analyst that specializes in an industry where the market inverse demand is P = 300 - 4Q. The external marginal cost of producing the product is MCExternal = 8Q, and the internal cost is MCInternal = 15Q.Instructions: Enter your responses rounded to the nearest two decimal places.a. What is the socially efficient level of output? unitsb. Given these costs and market demand, how much output would a competitive industry produce? unitsc. Given these costs and market demand, how much output would a monopolist produce? unitsd. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output.Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.check all that apply Pollution taxes Nonrival consumption Pollution permits
Consider the table. Number of street lamps Marginal benefit (in $) 123 4 5 6 7 30 26 22 18 14 10 6 Suppose that a small town wants to install street lamps, which are nonrival in consumption and nonexcludable. Each of the 25 people in the town value street lamps according to the given schedule. Street lamps each cost $250 to install. Use this information to answer the questions. What is the socially optimal number of street lamps? Suppose that 20 of the 25 townspeople decide that they will not help pay for street lamps, and will instead enjoy (for free) the street lamps built by the other five people. What is the maximum number of street lamps that will be built by the remaining five people? Suppose the town government decides to build street lamps and pay for the street lamps through taxation. How much should each person be taxed to pay for the optimal number of street lamps if everyone is taxed equally? S I street lamps street lamps
PRICE (Dollars per ton) 70 63 56 49 42 35 28 + 21 T 14 7 0 Demand +++ 0 40 80 120 160 200 240 280 320 360 400 QUANTITY (Millions of tons) Graph Input Tool Daily Demand for Pollution Rights Price (Dollars per ton) Quantity Demanded (Millions of tons) 7 360 Suppose the government has determined that the socially optimal quantity of particulate matter is 120 million tons per day. One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. A tax (or price in this case) of $ of particulate matter emitted will achieve the desired level of pollution. ? per ton Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of particulate matter per day. To achieve the socially optimal quantity of pollution, the government auctions off 120 million…
The public smoking of cigarettes generates costs to society from second-hand smoke, therefore, cigarette production imposes costs on people who do not smoke. Moreover, private consumption of cigarettes can start apartment building and wild fires that also impose costs on non-smokers. Luckily, fire extinguishers can help prevent the spread of fires.
Consider the following graph that shows the marginal abatement cost (MAC) curve for a coal power plan for reducing local air pollution and the marginal damage (MD) curve for those living around the coal power plant. MD (E) MAC (E b. Emissions E-0 E EL E-Max AMax Or Abatement E A-0 What are the total abatement costs at E' (enter your answer with the letters and "+" signs as "a+b+c+d+e+f", without the quotation marks. What are the total abatement costs at E-0 (enter your answer with the letters and "+" signs as as "a+b+c+d+c+f", without the quotation marks. If the property rights were with the coal power plant how much Emissions would we see? (enter one of the following, "E-0", "E", "E1", "E-Max") If the property rights were with the people how much Emissions would we see? (enter one of the following. "E-0", "E", "E1 "E-Max") What is the socially optimal level of emissions (choose from one of the following and enter as written without the quotation marks, "E-0". "E"E1 "E-Max").

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