22.) Which of the following is a market-based policy intervention to correct the negative externalityassociated with nitrous oxide (NO) emissions from cars?a.) A law that requires all car manufacturers to install catalytic converters on new vehiclesb.) A law that forbids driving on days with low air qualityc.) A $3 per gallon tax on gasoline and diesel fueld.) None of the above23.)Consider a market subject to a negative externality cause by pollution. Suppose that, initially, thegovernment is dealing with this negative externality using a Pigouvian tax. The government isconsidering switching its handling of the negative externality to a scheme where it auctions offpollution licenses to producers instead. If the government makes this policy change, thenproducer surplus willand government surplus willa.) Increase, increaseb.) Decrease, decreasec.) Decrease, increased.) None of the above24.)Which of the following is a private good?a.) A hard copy of Principles of Microeconomics by N. Gregory Mankiwb.) A PDF copy of Principles of Microeconomics by N. Gregory Mankiw saved in a publicDropbox folder.c.) The fresh water supply in the Great Lakes.d.) A natural gas pipeline.25.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their townpark are given by PP = 100 – QP, PR = 200 – 2Qº, and P? = 300 – 3Qº respectively.What is the slope of the MBS curve for statues?a.) -4b.) -5с.) -6d.) -7

The situation that arrives when the consumption or production of a product would result in a cost to…

22.)Which of the following is a market-based policy intervention to correct the negative externality associated with nitrous oxide (NO) emissions from cars? a.) A law that requires all car manufacturers to install catalytic converters on new vehicles b.) A law that forbids driving on days with low air quality c.) A $3 per gallon tax on gasoline and diesel fuel d.) None of the above

22.)Which of the following is a market-based policy intervention to correct the negative externality associated with nitrous oxide (NO) emissions from cars? a.) A law that requires all car manufacturers to install catalytic converters on new vehicles b.) A law that forbids driving on days with low air quality c.) A $3 per gallon tax on gasoline and diesel fuel d.) None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2) Suppose the demand curve for a rubber-based product is Q_D=225-0.5P, and the supply curve is Q_S=0.5P-15. If the external cost of the suit from the waste produced by the factory producing the item is MEC-Q, calculate: (a) Competitive price and quantity when there is no control over the waste disposal of the factory. (b) Price and quantity at the socially optimal level.
These two situations have arisen: Agricultural technologies become available that if used reduce adverse effects fromfarming on environmental quality Water from a uranium mine is leaking into Kakadu NationalPark For each case you are to identify possible external effects that might occur and explain the conditions that would need to exist, and what the government or the affected parties could do, to change these negative situations for the betterment of one or both parties?
(a) Explain the difference between a positive externality and a negative externality and why each result in an equilibrium point that is not optimal for society. (b) which externality results in an equilibrium quantity that is higher than the optimal social quantity of a good? (c) how can the impact of the externality in part b be corrected?
5) Mr. Leon is at it again! He vandalized a public park. Now society has to clean it up. Based on the numbers below what would be the socially optimal amount that should be cleaned up? % cleaned total benefits total costs 25 $10,000 $1,000 50 $15,000 $4,000 75 $18,000 $7,000 100 $19,000 $10,000 *Show the marginal benefits and marginal costs, graphically.
f.) What is the dead weight loss of allowing the market for plastic bags to operate competitively, free of government intervention?
When externalities cause markets to be inefficient (x) government action is sometimes needed to solve the problem. (y) private solutions can be developed to solve the problem. (z) there is a way to eliminate the problem of externalities in the market if producers are provided with the appropriate incentives to internalize the externality. Select one or more: a. (x), (y) and (z) b. (x) and (y) only c. (x) and (z) only d. (y) and (z) only e. (z) only
Which of the following instruments is government most likely to apply when confronted with a positive externality? (a) Subsidies. (b) Taxation. (c) Coase bargaining. (d) Usage fees.
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for electricity. Suppose that a power plant dumps byproducts into a nearby river, creating a negative externality for those living downstream from the plant. Producing additional electricity imposes a constant per-unit external cost of $300. The following graph shows the demand (private value) curve and the supply (private cost) curve for electricity. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $300 per unit. 1000 900 800 700 600 500 400 300 200 PRICE (Dollars per unit of electricity) 100 ப 0 0 1 2 ° 3 0 ° 4 ° QUANTITY (Units of electricity) 5 6 Supply (Private Cost) Demand (Private Value) Social Cost ? The market equilibrium quantity is units of electricity, but the socially optimal quantity of electricity production is units. To create an incentive for the firm to produce the socially optimal quantity of electricity, the government…
Determine whether the actions below correct positive, negative externalities or neither: A. Correct neither B. Correct negative externalities C. Correct positive externalities 1. encourage activity in the market 2. Government investment in infrastructure 3. regulate the production and the externalities in the market
2. Efficiency in the presence of externalities Trucks impose many external costs on society: heavy air and noise pollution, traffic safety issues and road congestion, and so on. Therefore, the market equilibrium quantity of diesel trucks does not equal the socially optimal quantity. The following graph plots the demand for diesel trucks (their private value), the supply of diesel trucks (the private cost of producing them), and the social cost of diesel trucks, including both the private cost and external costs. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity. PRICE OF DIESEL TRUCKS Social Cost Supply (Private Cost) Demand (Private Value) QUANTITY OF DIESEL TRUCKS + Market Equilibrium ■ Socially Optimal Level ?