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 $105 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 $105 per ton. The market equilibrium quantity is ___ tons of paper, but the socially optimal quantity of paper production is ___ tons. To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a ___ of ___ per ton of paper. A ng.cengage.comS Giants vs Cowboys Tickets, Dec 19 in East Rutherford | SeatGeekb My Questions | bartleby* Mind Tap - Cengage Learning+: Bridget v* CENGAGE MINDTAPQ Search this course«Homework (Ch 10)3. The effect of negative externalities on the optimal quantityof consumptionConsider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those livingdownstream from the factory. Producing an additional ton of paper imposes a constant external cost of $105 per ton. The following graph shows thedemand (private value) curve and the supply (private cost) curve for paper.A-ZUse the purple points (diamond symbol) to plot the social cost curve when the external cost is $105 per ton.(?700630Social Cost560bongo490Supply420(Private Cost)* 350280210A140Demand70(Private Value)123467QUANTITY (Tons of paper)The market equilibrium quantity isv tons of paper, but the socially optimal quantity of paper production isv tons.To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a- of $per ton ofраper.Grade It NowSave & ContinueContinue without savingPRICE (Dollars per ton of paper)

Quantity Private cost Social cost=Private cost +105 Demand 1 70 185 630 2 140 245 490 3 245 350 350 4 315 420 210 5 385 490 140 6 455 560 105Market equilibrium quantity will be 3.5 tons, where supply curve intersect demand curve and socially optimal quantity will be 3 tons, where social cost curve intersects demand curve. To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a tax of $105 per ton of paper because imposing tax will have same impact as the social cost on the market.

Answered: Consider the market for paper. Suppose…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 $105 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 $105 per ton.

The market equilibrium quantity is ___ tons of paper, but the socially optimal quantity of paper production is ___ tons.

To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a ___ of ___ per ton of paper.

A ng.cengage.com
S Giants vs Cowboys Tickets, Dec 19 in East Rutherford | SeatGeek
b My Questions | bartleby
* Mind Tap - Cengage Learning
+
: Bridget v
* CENGAGE MINDTAP
Q Search this course
«
Homework (Ch 10)
3. 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 $105 per ton. The following graph shows the
demand (private value) curve and the supply (private cost) curve for paper.
A-Z
Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $105 per ton.
(?
700
630
Social Cost
560
bongo
490
Supply
420
(Private Cost)
* 350
280
210
A
140
Demand
70
(Private Value)
1
2
3
4
6
7
QUANTITY (Tons of paper)
The market equilibrium quantity is
v tons of paper, but the socially optimal quantity of paper production is
v tons.
To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a
- of $
per ton of
раper.
Grade It Now
Save & Continue
Continue without saving
PRICE (Dollars per ton of paper)

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