According to the graph, if the government does not intervene in the market for gasoline, the equilibrium price of a gallon of gasoline will be and drivers will buy | million gallons. Which of the following statements correctly describe the market for gasoline? Check all that apply. The marginal social cost of gasoline is greater than the marginal private cost. At the market quantity, the marginal private cost of gasoline exceeds the market price. Society prefers that more than the market output of gasoline be produced. The market outcome is not socially efficient. Suppose that government regulators try to deal with the pollution externalities by imposing a binding limit on the quantity of gasoline that can be sold. Together, producers in this market can sell a maximum of 12 million gallons.

According to the graph, if the government does not intervene in the market for gasoline, the equilibrium price of a gallon of gasoline will be and drivers will buy | million gallons. Which of the following statements correctly describe the market for gasoline? Check all that apply. The marginal social cost of gasoline is greater than the marginal private cost. At the market quantity, the marginal private cost of gasoline exceeds the market price. Society prefers that more than the market output of gasoline be produced. The market outcome is not socially efficient. Suppose that government regulators try to deal with the pollution externalities by imposing a binding limit on the quantity of gasoline that can be sold. Together, producers in this market can sell a maximum of 12 million gallons.

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

Education benefits both students and the community. Suppose students purchasing education consider only their own benefits when determining how much education to obtain and schools supplying education consider only their costs when determining how much education to supply. In this situation, the social benefit will be [(Click to select) the private benefit and the amount of education produced will be (Click to select) the socially efficient amount.
Markets and Common Resources. This problem is also called “the tragedy of the commons.” There are seven families in the village. Each family has $70 to spend on either a steer or a bond. A steer today costs $70 per steer; a bond costs $70. In one year, a family can sell their steer that uses the common grazing land (the common resource) for the village. The revenue and price received for selling a steer depend upon how many other families are selling their steers. See the demand for steers in the graph below. A family can buy one steer or buy one bond. Therefore, the number of steers is the number of families that decided to buy a steer. If a family holds the $70 in cash, the family will earn nothing. Each family has $70. If a family buys a bond today for $70, they will receive $90 in one year. A family can only earn income from raising & selling steers or from buying and holding bonds. Hint: complete the table first. How many families will want to buy a…
Discuss how rationing impure public goods would limit consumption of the following (USE PROPER DIAGRAM) : i. Roads : ii. Healthcare iii. Public recreational parks
Explain why there are no markets for public goods briefly.
For each of the goods, identify the characteristics that describe each good. Note that each good will be described with two characteristics. Rivalrous is also referred to as rival in consumption. Consider only the immediate benefits and costs, not any externalities. National Defense Pay- Per- View Cable Television A Hot Pocket Sandwich Private Classroom Education Pajamas A unicycle Excludable Nonrivalrous Nonexcludable Rivalrous
Scenario 10-1 The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000th gallon of gasoline entails the following: a private cost of $3.10 • a social cost of $3-55 a value to consumers of $3.70 Refer to Scenario 10-1. Suppose the equilibrium quantity of gasoline is 1,150 gallons; that is, QMARKET = 1,150. Then the equilibrium price of a gallon could be a. $3.30. b. $3.80. c. $3.00. d. $2.80.
A small town provides a fireworks display, which is a public good, every fourth of July. For simplicity, assume the town only has two residents: Hayden and Madison. Their demands for the fireworks display are illustrated in the figure to the right. Construct the market demand curve for this public good. 8.00 7.50- 7.00- 6.50- 6.00- 5.50- 5.00- 4.50- Use the line drawing tool to draw the market demand curve (DMarket) for the fireworks display. Properly label this line. 4.00- DMadison DHayden 3.50- Carefully follow the instructions above, and only draw the required objects. 3.00- 2.50- P 2.00- 1.50- 1.00- 0.50- 0.00- 2 4 6 8 10 12 14 16 Quantity (number of fireworks) Price (dollars per firework)
Suppose there are only two consumers in the market for a public good. The figure to the right shows marginal benefit lines for a public good for the two individuals, Andrew (A) and Brenda (B). Use the line drawing tool to draw and label the social marginal benefit line. Make sure that the line extends from quantity level 0 to 10 as the private marginal benefit lines do. Carefully follow the instructions above, and only draw the required object. Marginal Benefit, Marginal Cost ($) 20- 18- 16- 14- có + 2- 0- -O 0 1 MC 2 3 4 5 6 7 8 9 Quantity of a Public Good MBA MBB 10 11 12 Q
The restaurant industry develops an exciting new technology, a robot that quickly prepares food in half the usual time of chefs. This increases supply (producers save costs on labor) and demand (consumers find it fun to watch the robot make a meal) such that the price remains constant. However, the robot runs on coal and produces a lot of pollution, generating an external cost on production. How do consumer and producer surplus change as a result of this new technology? Choice 1 of 4:Consumer surplus increases but the change in producer surplus is indeterminateChoice 2 of 4:Producer surplus increases but the change in consumer surplus is indeterminateChoice 3 of 4:Both producer and consumer surplus increaseChoice 4 of 4:Both producer and consumer surplus decrease
The price of good X is $7. But each unit of good X produces has an external cost of $1. What is the social cost of one unit of good X?
Consider the supply of soybeans in South America and the demand for soybeans in China. Draw a graph in which you show the current market equilibrium price of soybeans and quantity of soybeans traded. Include the curve that shows the true social costs of soybean production. Show the socially optimal amount of soybeans traded. Show the price that should really be charged for soybeans to ensure that production moves to the socially optimal level. Ensure that you label your graph correctly (all curves, axes, prices and quantities labeled). Show the deadweight loss of soybean production. What intervention could be used to change the market price for soybeans to the level that would move the quantity of soybeans traded to the optimal level? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Question 22 Refer to Figure 2 in Question 20. What price and quantity combination best represents the socially optimum price and number of concerts that should be organized? Group of answer choices P1 and Q0 P1 and Q1 P2 and Q0 P2 and Q1