10 9 6 4 3 SB D 0 5678 9 10 The graph above shows a market with an externality. Refer to the graph to answer the following questions: In this market the externality is ♦ If the government does not interfere in the functioning of this market, the quantity traded in the market is and the price is $ . One way for the government to move the market to the efficient point is to implement a corrective + in the amount of $ per unit. P ($) 2 1 S

10 9 6 4 3 SB D 0 5678 9 10 The graph above shows a market with an externality. Refer to the graph to answer the following questions: In this market the externality is ♦ If the government does not interfere in the functioning of this market, the quantity traded in the market is and the price is $ . One way for the government to move the market to the efficient point is to implement a corrective + in the amount of $ per unit. P ($) 2 1 S

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 following graph shows the demand (marginal private benefits, or MPB) and supply (marginal private costs, or MPC) curves for a good. Suppose that a negative externality arises as a result of the production of the good. In particular, the external costs equals $1 per unit of output. The purple line on the graph represents the marginal social costs (MSC) curve associated with this externality. A corrective tax of On the following graph, use the black point (plus symbol) to plot the socially optimal outcome. Suppose the government imposes a $3-per-unit tax on the production of the good. Use the green line (triangle symbol) to plot the new demand or supply curve as a result of the $3-per-unit tax on the production of the good. Then, use the grey point (star symbol) to plot the price and quantity combination with the tax. PRICE AND COST (Dollars per unit) 10 9 8 $1 per unit would result in socially optimal outcome. 0 0 10 20 30 60 40 QUANTITY (Units) 50 + 70 MSC D (MPB) S (MPC) 80 90 100…
Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? If there is an external benefit of $3, what is the efficient quantity? For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the market is perfectly competitive and that "one allowance" lets you…
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1) People who live on the edge of small lakes sometimes have break walls constructed on their property by the shore. A break wall is typically a vertical column of wood or concrete that prevents high water levels from covering part of the owner's property, reducing the size of the beach, and/or eroding the yard. However, several communities have restricted property owners from building break walls. What is one reason for that? Hint: Think about potential externalities of building a break wall. (Short answer) 2)When are quantity restrictions not the same as price restrictions (via taxes)? Describe one situation in which the government would be better off imposing quantity restrictions than setting a tax and explain why quantity restrictions are better in that case. (Short answer)
Sub : EconomicsPls answer very fast.i ll upvote correct answer . Thank You The figure below shows the market for water-skiing permits on Shuswap Lake in British Columbia. Every person who wishes to water ski must obtain a permit, which is valid for one day. Suppose that each water skier imposes a $4 negative externality on other people who use the lake.
Suppose demand is Upper Q Subscript Upper D equals 20 minus Upper PQD = 20−P and supply is Upper Q Subscript Upper S Baseline equals Upper PQS=P. There is a constant positive externality of $4 per unit (Marginal External Benefit, MEB equals $ 4MEB =$4). The adjacent graph shows the supply curve described above. On this graph illustrate the demand curve and marginal social benefit curve and find the socially efficient point. 1.) Use the line drawing tool to illustrate the demand curve given above. Label this curve 'D'. 2.) Use the line drawing tool to illustrate the marginal social benefit curve given the information above. Label this curve 'MSB'. 3.) Use the point drawing tool to illustrate the socially efficient price and quantity. Label this point 'A'. Carefully follow the instructions above, and only draw the required objects.
Sub : EconomicsPls answer very fast.i ll upvote correct answer . Thank You The figure below shows the market for water-skiing permits on Shuswap Lake in British Columbia. Every person who wishes to water ski must obtain a permit, which is valid for one day. Suppose that each water skier imposes a $4 negative externality on other people who use the lake.
ayor Grinch imposes a $1 tax on each bottle of Zlurp. Consumption per person is now bottles. This yields a per-person consumer surplus of not including the cost of pollution, a per-person external cost of , and government revenue of per person. Total surplus per person is now as a result of this policy. (Hint: Total surplus is equal to consumer surplus minus the external cost of pollution plus government revenue.) Based on your calculations, you support the mayor's policy because it welfare compared to before the tax.
The following graph shows the externalities in the market of papers. Apparently, there are negative externalities in the production of paper. The Marginal External Cost is estimated to be a constant $10 for all quantities. MSC S = MPC 110 105 100 95 Price, Benefit, and Cost (Dollars) D D m 4.5 5 Tons of Paper per Year (Millions) i. Explain how we can get the MSC. U D = MSB
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for electric cars. Suppose that a electric car manufacturing facility dumps sludge into a nearby river, creating a negative externality for those living downstream from the facility. Producing additional electric cars imposes a constant per-unit external cost of $600. The following graph shows the demand (private value) curve and the supply (private cost) curve for electric cars. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $600 per unit. PRICE (Dollars per unit of electric cars) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 0 + 1 O □ ☐ O 2 3 4 5 QUANTITY (Units of electric cars) The market equilibrium quantity is ☐ Supply (Private Cost) 6 Demand (Private Value) 7 Social Cost (?) units of electric cars, but the socially optimal quantity of electric car production is To create an incentive for the firm to produce the socially optimal…
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The marginal private benefit (downward sloping) and marginal private cost (upward sloping) curves for the bread market are shown below. If producing bread generates a $1 per unit external benefit in the form of a pleasing aroma, use the line tool to draw the marginal social benefit curve. (Put the endpoints of your curve on the horizontal and vertical axes.) Segment * Undo A Redo x Reset 10 9 80 7 6 5 4 2 1 1 4 5 6 7 8 9 10