a public good, are two consumers, A B, who margina benefit curves are shown below. In the same diagram, the marginal cost curv for G is also shown. Based on the diagram, the Pareto optimal level of G is units. 12 11 10 9 1 1 2 3 5 MBA 7 6 8 MBB 9 MC 10 11 12 13 G
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![Consider a public good, G. There are two consumers, A and B, wnose marginal
benefit curves are shown below. In the same diagram, the marginal cost curve
for G is also shown. Based on the diagram, the Pareto optimal level of G is
units.
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- 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 lampsPRICE (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…Lecture: Externality - Pigou8. All-Leather is a tanning company located on Lake Michigan in Chicago. Its total cost functionis C(QA) = 125 + 8QA + 5QA2, where QA is leather production per week in thousands of pounds.a) If leather sells for $408 per thousand pounds, how much leather will All-Leather produce?How much profit does All-leather earn?Enjoy is a beverage company located on Lake Michigan near All-Leather in Chicago. Enjoy’sproduction of beverages is negatively affected by water pollution from All-Leather’s productionof leather. Enjoy’s total cost function to produce beverages isC(QE) = 10QE +3QE2 + 3QA2where QE is Enjoy’s weekly production of beverages, in thousandsof gallons and, as above, QA is All-Leather’s weekly production of leather.b) Is this an example of a pecuniary externality or a real externality? Explain.c) What is the extra cost to Enjoy from an additional thousand tons of leather production by AllLeather (i.e., the external marginal cost of an extra unit of QA…
- O Completed 20 out of 20 All of these will lead to market failure EXCEPT if the good O is a public good. creates externalities. is a private good. O is a common property resource. LAPTOP LOGIN USERNAME: stude cer PASSWORD: Brow.Exhibit 30-2 Price and Cost 0,0₂ b) ABE. Refer to Exhibit 30-2. If the exhibit represents a positive externality situation, the private cost of expanding output from Q₁ to Q₂ is the area of a) Q₁CBQ2. Cuantity c) Q₁AEQ₂- d) Q₁ABQ₂.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
- A ng.cengage.com/static/nb/ui/evo/index.html?deploymentld%3598281247957E 1Gmail E eAccount Quick Car.. B Calendar | Navigate Main Street Comm. 劉 Ta « CENGAGE MINDTAP Homework (Ch 10) Back to Assignment Atempts Keep the Highest/3 Tools 7. Correcting for negative externalities - Taxes versus tradablepermits Power stations emit sultur dioxide as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a ps negative externality of power production. Suppose the u.S. government wants to correct this market failure by getting firms to internalize the cost of pollution. To da this, the government can charge firms for pollution rights (the right ta emit a given quandity of sulfur dioxide). The following graph ps shows the daly demand for polution rights. Lise the graph input tool to hel you answer the fallowing questions. You wit not be praded on any changes you make to this graph. Note: Once you enter a value in a white feld, the graph and any…ter 5 i A public good Multiple Choice generally results in substantial negative externalities. can never be provided by a nongovernmental organization. costs essentially nothing to produce and is thus provided by the government at a zero price. can't be provided to one person without making it available to others as well.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").
- Imagine a firm's marginal abatement cost function with existing technologies is: MAC = 200 - 10E. If the firm adopts new pollution abatement technologies, its marginal abatement cost function will be: MAC = 100 - SE. With a tax on emissions of $20, the benefits of adopting the new technologies equal: Select one: a. $30. b. $20. c. $25. d. $50.Econo X C A small city has an open space in X + =es/3d8faf7a-7f4e-423e-967d-dd440d76e4f0/5/6rnrrh/tools/assessment/items/1d065957-ec50-43fd-8ea9-... -5% True Command-and-control regulation is typically more efficient than emissions taxes. Answer Bank Pollution taxes encourage firms to find innovative ways to remove pollution. H Firms generate the same level of pollution regardless of any pollution taxes that are imposed. With a pollution tax, firms must pay a fine if they pollute more than the legally specified amount. Q Search Resources Ex Give Up? False A A pollution charge and a pollution tax are the same thing. Q Hint GDraw a diagram of the marginal abatement cost curve described by: MAC = 100 - 2E. What is the uncontrolled level of emissions? What is the marginal abatement cost of the 40thunit of abatement? What is the total abatement cost of 40 units of abatement?
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