Assume the following:• market quantity < socially desirableThe inequality above describes which of the following?O a. Budget SurplusO b. Positive Externalityc. Budget Deficitd. Negative ExternalityQUESTION 6In order to internalize a negative externality the government should implement aO a.subsidyb. free for allc. bidding ward. taxQUESTION 7In order to internalize a positive externality the government should implement aa. minimum wageb. taxc. subsidyd. spoils system QUESTION 10Which of the following types of firms are likely to respond to a corrective tax by reducing their pollution emissions?a. Firms with high abatement costsb. Firms that love the environmentc. Firms that want a boost to their public imaged. Firms with low abatement costsQUESTION 11In a tradable pollution permits system which of the following types of firms are likely to do most of the pollution reduction?a. Firms with high cost of reducing pollutionb. Firms with low cost of reducing pollutionc. Firms that pay low wagesd. Firms that pay high wagesQUESTION 12Which of the following argues for private solutions to externalities?Oa. Pigovian Theoremb. Coase TheoremC. Smith TheoremOd Folk Theorem.

Externalities are side effects of economic activities which are faced by the third parties. The…

Answered: Assume the following: • market quantity…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 43 Which of the following is an example of the "free rider problem?" O A consumer uses a grocery coupon to receive one free can of beans when they buy one. O Getting a free ice cream at Graeters since you have eamed enough points fro the cone. O Drivers on the new public highway towards the Intel site. OA thief steals someone's walet and uses the cash to buy lunch. QUESTION 44 In the presence of a negative externality the costs of production only incurred by the firm are O a. The external costs Ob The exterior costs Oc Private cost Od. The public costs. QUESTION 45 The wage is to labor as O a Rent is to entrepreneurship O b. Price is to human capital Oc. Interest is to economic capital O d. Profit is to financial capital. A
per unit $P $24 $22 $20 $17 $13 0 Area "abd" Area "efad" Area "efbc" e b O Area "abcd" O Area "abc" C d a 50 70 Use the graph above (note: the graph may be different than the previous question). If the market is producing at 50 units, what area corresponds to the deadweight loss in the market? social MC Private MC private MB # of units O There is no deadweight loss when producing at that quantity.
1. An externality exists when agent A’s utility or production function depends on real variables chosen by another agent B, without an offer of compensation or other attention given to the effect of A’s well-being. True or False 2. The "invisible hand" of the market leads to the efficient allocation of goods and services, even in the presence of externalities. True or False 3. If there is a negative production externality, the market price of the good will be higher than the socially-optimal price. True or False
37 $50 Supply $40 t of $30 E $20 F Price $10 Ceiling Demand $0 40 80 120 160 200 Quantity In the market shown in the diagram above, the government has imposed a Price Ceiling at $10. Assuming the original equilibrium at point E was socially optimal, the Deadweight Loss from the Price Ceiling would be Select one: а. $800 b. $200 c. $100 d. $400 Price
When a quota is used with "cap and trade" to control an externality, the government must determine both _____ and _____. Select one: a. the socially optimal quantity; the socially optimal price b. how large a tax to use; which external impact to address c. how to bargain with companies; whether to use a subsidy d. the socially optimal quantity; how to distribute that quantity across suppliers
Figure 1. The graph depicts the market for plastic containers. Price 16- 14- 12- 10 8- 6 200 500 650 Social Cost Private Cost Demand Quantity Refer to Figure 1. In order to reach the social optimum, the government could O offer a subsidy of $8 per unit on the production of plastic containers. O impose a tax of $8 per unit on the production of plastic containers. O offer a subsidy of $4 per unit on the production of plastic containers. O impose a tax of $4 per unit on the production of plastic containers.
PRICE 20 18 16 14 12 10 8 6 4 2 Figure 10-3 Social Value Supply Demand, 2 4 6 8 10 12 14 16 18 20 QUANTITY Refer to Figure 10-3. If the government wanted to tax or subsidize this good to achieve the socially optimal level of output, it would O a. introduce a subsidy of $4 per unit. O b. impose a tax of $4 per unit. O c. impose a tax of $2 per unit. O d. introduce a subsidy of $2 per unit.
4. Give an example of a negative externality and an example of a positive externality..?
Suppose that smoking creates a negative externality. If the government does not interfere in the cigarette market, then Select one: O a. the equilibrium quantity of cigarettes smoked will be greater than the socially optimal quantity of cigarettes smoked. O b.the equilibrium quantity of cigarettes smoked will equal the socially optimal quantity of cigarettes smoked. O c. the equilibrium quantity of cigarettes smoked will be less than the socially optimal quantity of cigarettes smoked. O d. There is not enough information to answer the question.
Question Consider two individuals, Adam and Eve, who have the following in-verse demand curves and face a marginal cost curve below. PA = 100 1/2 Qa; PE = 200 Qe MC = 2/3 Q (a) If the good is private, what is the equilibrium price and quantity in a competitive market? Is this outcome ecient? (b) If the good is public, ecient provision implies what price and quantity in the market?
ents Access re 25 Drive Hub Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive. The demand curve, the social-value curve, the supply curve, and the social-cost curve of the market for alcohol are drawn on the following graph. Which one represents the supply curve? P Curve Il Curve Ill. Curve IV. O Curve 1 || IV ||| Q
Use the figure below to answer the following questions. Price (dollars per uni 25 20 15 10 S 0 50 100 150 200 250 Quantity (unit) Refer to Figure 5.3.1. If the quantity produced is 100, Figure 5.3.1 Select one: O A. marginal social cost exceeds marginal social benefit. OB. deadweight loss is zero. OC. marginal social benefit is minimized. OD. marginal social benefit exceeds marginal social cost. OE. production is efficient.

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Assume the following: • market quantity < socially desirable The inequality above describes which of the follow O a. Budget Surplus O b. Positive Externality