2. The next graph illustrates a market. Choose and circle one type of externality from the potential four listed below: Negative externality in production of $2 per unit of output Negative externality in consumption of $2 per unit of output Positive externality in production of $2 per unit of output Positive externality in consumption of $2 per unit of output On the graph below, sketch the Societal MC if you chose an externality in production, show the Societal MB if you chose an externality in consumption. (Hint: You can show this with a $2 shift of the appropriate curve Supply or Demand, in the appropriate direction.) a. Show the amount traded in this market. b. Show the socially optimal amount of production or consumption in this market. c. Is there overproduction or underproduction in this market? tion is prect W he ernality Hew m. ---- corre ...tedr Price, P 10 9. 8 7 6 E PE 5 4 3 1 D. 0 1 3 4 5 6 7 8 9 Or Widgets, Q 10 2)

2. The next graph illustrates a market. Choose and circle one type of externality from the potential four listed below: Negative externality in production of $2 per unit of output Negative externality in consumption of $2 per unit of output Positive externality in production of $2 per unit of output Positive externality in consumption of $2 per unit of output On the graph below, sketch the Societal MC if you chose an externality in production, show the Societal MB if you chose an externality in consumption. (Hint: You can show this with a $2 shift of the appropriate curve Supply or Demand, in the appropriate direction.) a. Show the amount traded in this market. b. Show the socially optimal amount of production or consumption in this market. c. Is there overproduction or underproduction in this market? tion is prect W he ernality Hew m. ---- corre ...tedr Price, P 10 9. 8 7 6 E PE 5 4 3 1 D. 0 1 3 4 5 6 7 8 9 Or Widgets, Q 10 2)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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