a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $40 per unit and theexternal cost at $20 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area.MPCMPB100Tools9080MSBMSC70605040302010369 1215 1821 24 27 30 33 36 39 42 45Quantity per periodb. What are the most desirable price and quantity from society's point of view?Price: $Quantity:c. If government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to producers per unit?Value of subsidy: $d. if, instead, government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to consumersper unit?Value of subsidy: $Price

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a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $40 per unit and the external cost at $20 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area. MPC

a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $40 per unit and the external cost at $20 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area. MPC

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following diagram which illustrates MPB, MSB and MPC of education. In this diagram, the marginal external benefits (MEB) caused by education at the efficient level of education is equal to? a) $9 b) $7 c) $12 d) $5
Please explain each solution step by step. Consider an economy with 2 plants, A and B, whose operations produce emissions. The graphs show the marginal benefits (MB) to each plant from its emissions on the y-axis (in Euros) and the quantity of emissions in tons on the x-axis. The graph on the left represents the case when the government imposes a limit on emissions. The graph on the right represents the case when the government imposes a tax on emissions. a) let's say the government limits the emissions of each plant at 4 tons. The marginal benefit of 4 tons of emissions to plant A is 2 euros. Referring to the graph on left, what is the welfare loss to plant A from the limit imposed by the government? (euros) b) now let's say the government sets a unit tax on emissions of 6 euros. Under this tax, plant B will produce 6 tons of emissions and plant A will produce 2 tons of emissions. Referring to the graph on the right, what is the total net welfare from the imposition of the tax?…
Please explain each solution step by step.Consider an economy with 2 plants, A and B, whose operations produce emissions. The graphs show the marginal benefits (MB) to each plant from its emissions on the y-axis (in Euros) and the quantity of emissions in tons on the x-axis. The graph on the left represents the case when the government imposes a limit on emissions. The graph on the right represents the case when the government imposes a tax on emissions.a) let’s say the government limits the emissions of each plant at 4 tons. The marginal benefit of 4 tons of emissions to plant A is 2 euros. Referring to the graph on left, what is the welfare loss to plant A from the limit imposed by the government? (euros)b) now let’s say the government sets a unit tax on emissions of 6 euros. Under this tax, plant B will produce 6 tons of emissions and plant A will produce 2 tons of emissions. Referring to the graph on the right, what is the total net welfare from the imposition of the tax?…
Consider an economy which is heavily dependent on tourism. To boost tourist revenue, the government has decided to reclaim the sea to build a theme park at the coastal area. This has resulted in sea pollution, reduces the fish stock and threaten the livelihoods of fishermen in the vicinity. (a)Describe the type of externality exist in the scenario. Explain with a suitable diagram and highlight the area of the efficiency loss. (b)Explain the remedial action to rectify the externality problem.
The market for a particular chemical, called Dexzon, is described by the following equations: • Demand: QD = 100 – 5P • Supply: QS = 5P where Q is measured in ounces of Dexzon and P is price in dollars per ounce. For each ounce of Dexzon produced, 1 unit of pollution is released into the environment. The external cost of the pollution is estimated to be $4 per ounce of Dexzon produced. a) Draw a diagram to illustrate the market for Dexzon described above. On your diagram, clearly indicate the market equilibrium, the efficient equilibrium and the price and quantity at each of these equilibria. b) On your diagram in a), shade the area that corresponds to the deadweight loss. c) Compute consumer surplus, producer surplus and total surplus both in the market equilibrium and in the efficient equilibrium. What is the size of the deadweight loss?
Question 4:Q4 a) Why do externalities lead to inefficient outcomes? Explain why allocating propertyrights might help solve this problem. Q4 b) In what real-world circumstances might this approach be easier to implement andwhy?
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E2: complete the following using the graph.
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