Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $40 for the third unit of a public good; Kara is willing to pay $25. If the marginal cost of producing the third unit is $95, what is the minimum amount that Susie must be willing to pay for it to be efficient for government to produce the third unit? Multiple Choice $65 $30 $125 $95 The amount cannot be determined with the Information provided. O O

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $40 for the third unit of a public good; Kara is willing to pay $25. If the marginal cost of producing the third unit is $95, what is the minimum amount that Susie must be willing to pay for it to be efficient for government to produce the third unit? Multiple Choice $65 $30 $125 $95 The amount cannot be determined with the Information provided. O O

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.6P

See similar textbooks

Similar questions

Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive. a. Illustrate the market for alcohol, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, and the efficient level of output. b. On your graph, shade the area corresponding to the deadweight loss of the market equilibrium. (Hint: The deadweight loss occurs because some units of alcohol are consumed for which the social cost exceeds the social value.) Explain.
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between K and L, can you say which one is better and why? In the choice between K. and N, can you say which one is better, and why? If you had to guess, which choice would you think is move likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
Give an example of a positive externality and an example of a negative externality.
In the tradeoff between economic output and environmental protection, what do the combinations on the protection possibility curve represent?
The following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. Price of high tmissiens velides Sorial Value &, Quantity of high imissions vehidles What is the social cost of the last unit traded in the market? O P1 O P2 O P3 OP4 O OO0
Q68
ASAP plz Why don't people/stores make different decisions? Cost is a factor: a case of foam take-out containers costs $25, compared with $58 for paper and recyclable-plastics. How does this affect the firm's profit? Are consumers willing to pay more? Negative externality Consider the demand and supply given above. Suppose there is an external cost given by MEC=5Q. Find social equilibrium price and quantity. Draw a graph and label both private and social equilibrium.
Answer the attached question
Suppose that a mayor of a large city believes strongly that education provides great benefits to the community andurges the state government to provide the district with more money. An economist would say that this reflects theMayor's belief that:Asince teachers are overpaid, the district needs more money to hire enough teachers for its classrooms.Bthere are positive external benefits associated with education.Cthere are nontrivial external costs associated with education.Dpublic schools provide a higher quality education than private schools.
qs abiv 30 ovo pilo 5. Oil spills from oceangoing tankers are rare but bring huge damages to coastlines when they occur within 200 miles of shore. Unfortunately, most tanker spills do occur on or near coasts. Rank the following alternatives according to how efficient they are in i jud, responding to the threat of oil spills. Explain your ranking. a. Each nation with an endangered coastline should impose a tax on all imported oil, a tax that raises enough revenue to compensate for any oil-spill damages. b. Each coastal nation should impose a tax on all domestically purchased oil, a tax that raises enough revenue to compensate for any oil-spill damages. c. Oil-carrying companies should be legally liable for all damages, in the courts of the countries whose national waters are polluted by the spills. d. Each coastal nation should intercept all oil tankers in national waters and charge them a fee that will cover the estimated costs of future oil spills.