8. (Figure: Positive Externalities and the Production of Semiconductor Chips) Look at the figure Positive Externalities and the Production of Semiconductor Chips. If the marginal external benefit of producing a chip is $10, then the socially optimal quantity of chips is and the socially optimal price is A) 200; $20 B) 300; $25 C) 500; $35 D) 600; $20

8. (Figure: Positive Externalities and the Production of Semiconductor Chips) Look at the figure Positive Externalities and the Production of Semiconductor Chips. If the marginal external benefit of producing a chip is $10, then the socially optimal quantity of chips is and the socially optimal price is A) 200; $20 B) 300; $25 C) 500; $35 D) 600; $20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

1. Which of the following statement(s) is correct? (x) If a tax shifts the supply curve upward (or to the left), but the demand curve does not shift, we can infer that the tax was levied on both buyers and sellers of the good. (y) Suppose a tax is imposed on the sellers of cigarettes. The burden of the tax will be shared by the buyers and sellers of cigarettes but not necessarily equally. (z) When a tax is levied on sellers of a good, a wedge is placed between the price buyers pay and the price sellers effectively receive (and keep). (x). (y) and (z) A. B. (x) and (y) only C. D. E. (x) and (z) only (y) and (z) only (z) only
2. Externality. The table below lists the expected daily benefits between a resident that owns a tree and a neighbor who receives benefits from the neighbor's tree in terms of a providing a green canopy, a view, and sheltering wildlife. The owner of the tree receives benefits from having the tree on his yard but must also bear the costs of watering and maintaining the tree. The question is who owns the right to decide if the tree should be cut down or not. Assume both parties can negotiate at zero cost Homeowner Neighbor Tree Stays $25 $35 Tree is Cut Down $40 $30 a. Based on total benefits should the tree survive or be cut down? Explain? b. If the Homeowner were assigned the right to decide the fate of the tree, what would happen to the tree? Explain. c. If the Neighbor were assigned the right to decide the fate of the tree, what would happen to the tree? Explain. Could the Homeowner negotiate with the Neighbor for a different solution? Explain
7) A Detroit factory is polluting more than the socially optimal amount. The city government then imposes a lump sum tax on the business, but the business didn't change how much they were polluting. Explain what was wrong with the city's decision.
Assume workers in labour market M are qualified to work in an alternative competitive labour market N, and vice versa. What will happen to the wage rate and level of employment in market M if there is an increase in the demand for labour in market N?
(Figure: The Quantity of Pollution in Coal Production) Use Figure: The Quantity of Pollution in Coal Production. Whe this economy produces 50 tons of emissions: MSB, MSC 200 150 100 50 MSB 200 Quantity of pollution emisions (tons) it is producing below the socially optimal level of output. the marginal social cost equals the marginal social benefit. it is producing at its socially optimal level of output. the marginal social cost is greater than the marginal social benefit. 0 50 MSC 100 150
(Figure: Efficiency and Pollution in the Market for Vehicle Emissions) Use Figure: Efficiency and Pollution in the Market for Vehicle Emissions. Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society. The socially optimal quantity of pollution is ____ tons.
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant marginal external cost (MEC) of $175 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for paper. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $175 per ton. PRICE (Dollars per ton of paper) 500 450 400 350 300 250 200 150 100 50 0 0 O O 2 0 3 U 5 QUANTITY (Tons of paper) The market equilibrium quantity is O O 6 Supply (MPC) Demand (MPB) 7 MSC tons of paper, but the socially optimal quantity of paper production is To create an incentive for the firm to produce the socially optimal quantity of paper, the government…
12. Give an example of a public good, and explain why it is a public good. What would happen if we relied only on a free market to produce and sell this public good?? How do you think this public good should be provided? (this last question is supposed to be a matter of personal opinion)
Only typed answer
(Scenario: Avery and Ethan and the Demand for a Public Good) Use Scenario: Avery and Ethan and the Demand for a Public Good. At all levels of provision of the public good: Scenario: Avery and Ethan and the Demand for a Public Good Avery and Ethan are the only members of a community. They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known. In addition, the marginal social cost (MSC) of the public good is known and is constant. Marginal benefit of public good P₁ P₂ P3 P₁ Q₁ Q₂ Avery's MB Q3 Ethan's MB MSC MSB Q₁ Quantity transcript O the MSC is less than the MSB. O the optimal level is not attained. O the private marginal benefits cannot be determined. O Avery places a higher value on the public good than Ethan.
4. Understanding different policy options to correct for negativeexternalities Carbon dioxide emissions have been linked to melting of sea ice. The following table lists some potential regulations targeting the amount of airborne carbon dioxide. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Tradable Permit System Public Policy The government limits total carbon-dioxide emissions by all factories to 260,000 tons per five years. Each individual factory is given the right to emit 230 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $440 to any citizen who plants a tree. The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. The government charges…
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for steel. Suppose that a steel manufacturing plant dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the plant. Producing an additional ton of steel imposes a constant marginal external cost (MEC) of $165 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for steel. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $165 per ton. PRICE (Dollars per ton of steel) 1100 990 880 770 660 550 440 330 220 110 0 0 + 1 O ☐ O 2 0 H 3 ▬ The market equilibrium quantity is O 4 5 QUANTITY (Tons of steel) ☐ ☐ 6 Supply (MPC) Demand (MPB) 7 MSC ? tons of steel, but the socially optimal quantity of steel production is To create an incentive for the firm to produce the socially optimal quantity…