Consider a good for which there is a negative externality generated byproduction/consumption, with Marginal Private Bene fits, Private Costs, SocialBenefits, and Social Costs as illustrated below.23.1017.3010.0000ab2f9,400Ob) is a "club good."CdgOd) is a "common good "17,600c) generates a positive externality.Marginal Social Costs4Based upon this graph, it appears as if this gooda) generates a negative externalityh24,700Marginal Private Costs(Marginal Private Benefits) =(Marginal Social Benefits)quantity

Externality is the cost of benefit that is borne by the third party. There is negative externality…

Answered: Consider a good for which there is a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Is the answer A B C or D?
#21
2
consider the following graph of the marginal benefits (MB) and marginal costs (MC) of producing paper. (This is not a question about externalities). Assume fixed costs are zero. Also, these aren't damages and abatement costs. $ MC MB° h f b d a Раper Suppose the firm produced at qa. Which area best represents the inefficiency associated with this level of production? o a. {e} P {f} OC {f-b} Od {e+c}
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5. The effect of negative externalities on the optimal quantityof consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant external cost of $210 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for paper. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $210 per ton. PRICE (Dollars per ton of paper) 700 630 560 490 420 350 280 210 140 70 0 0 ¶¶ 1 O 2 O 3 4 5 QUANTITY (Tons of paper) The market equilibrium quantity is 0 ☐ Supply (Private Cost) 6 Demand (Private Value) 7 Social Cost ? tons of paper, but the socially optimal quantity of paper production is To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a of paper. tons. per ton
11.00 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 8 1.00 300 600 900 What kind of externality is depicted above? O a. A negative production externality O b. A positive consumption externality c. A positive production externality d. A negative consumption externality Demand 1200 1500 1800 2100 Supply Marginal Social Benefit 2400
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for steel. Suppose that a steel manufacturing plant dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the plant. Producing an additional ton of steel imposes a constant external cost of $140 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for steel. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $140 per ton. Sac Cont O Say Cet Demand P v QUANTITY (araf ste The market equilibrium quantity is tons of steel, but the socially optimal quantity of steel production is_ tons. To create an incentive for the firm to produce the socially optimal quantity of steel, the government could impose a ▼ of5 per ton of steel. d al anid
A change in which of the following variables will have NO direct effect on domestic demand?domestic incomegovernment spendingtaxesthe interest rate (r)none of the above
D Question 10 Which of the following is an example of a negative externality? O A person buys a car that is in need of repairs O A new restaurant's success causes another restaurant to go out of business O all of above O A worker is injured on the job O A new hotel ruins the view of the ocean for a few homeowners

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