Consider Product NE, which has a negative externality associated with its production and use ( i.e., the “Incidental Cost” ( IC) of each unit of Product NE is greater than zero). You are told that : * The “Efficient” Output of Product NE = 9000 units * The Free-Market Equilibrium Output of Product NE = 10,000 units * The Consumer’s Surplus + Producer’s Surplus on Unit Number 6000 ( i.e., on that one unit ALONE) is equal to $ 70 ( i.e., the sum of CS + PS = $ 70) * The Cumulative Surplus on the first 9000 units produced is equal to $ 175,000 ( i.e., the sum of the surplus( to society) on ALL 9000 units adds up to $ 175,000) Is the surplus ( to society) on Unit Number 6000 ( in isolation; i.e., on that unit alone) greater than $ 70, less than $ 70, or exactly equal to $ 70 ?
Consider Product NE, which has a negative externality associated with its production and use ( i.e., the “Incidental Cost” ( IC) of each unit of Product NE is greater than zero). You are told that : * The “Efficient” Output of Product NE = 9000 units * The Free-Market Equilibrium Output of Product NE = 10,000 units * The Consumer’s Surplus + Producer’s Surplus on Unit Number 6000 ( i.e., on that one unit ALONE) is equal to $ 70 ( i.e., the sum of CS + PS = $ 70) * The Cumulative Surplus on the first 9000 units produced is equal to $ 175,000 ( i.e., the sum of the surplus( to society) on ALL 9000 units adds up to $ 175,000) Is the surplus ( to society) on Unit Number 6000 ( in isolation; i.e., on that unit alone) greater than $ 70, less than $ 70, or exactly equal to $ 70 ?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider Product NE, which has a negative externality associated with its production and use ( i.e., the “Incidental Cost” ( IC) of each unit of Product NE is greater than zero).
You are told that :
* The “Efficient” Output of Product NE = 9000 units
* The Free-Market Equilibrium Output of Product NE = 10,000 units
* The Consumer’s Surplus + Producer’s Surplus on Unit Number 6000 ( i.e., on that one unit ALONE) is equal to $ 70 ( i.e., the sum of CS + PS = $ 70)
* The Cumulative Surplus on the first 9000 units produced is equal to $ 175,000 ( i.e., the sum of the surplus( to society) on ALL 9000 units adds up to $ 175,000)
Is the surplus ( to society) on Unit Number 6000 ( in isolation; i.e., on that unit alone) greater than $ 70, less than $ 70, or exactly equal to $ 70 ?
a. Greater Than $ 70
b. Less Than $ 70
c. Equal To $ 70
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