Cost (thousands of dollars per concert) MSC 100 80 60 MC 40 20 10 15 20 25 Quantity (concerts per year) The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. At 10 concerts, the O marginal private cost equals the marginal external cost. O marginal social cost equals $60,000. O marginal private cost is more than $40.000. O marginal external cost equals $60,000. O marginalexternal cost equals $80,000.

Cost (thousands of dollars per concert) MSC 100 80 60 MC 40 20 10 15 20 25 Quantity (concerts per year) The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. At 10 concerts, the O marginal private cost equals the marginal external cost. O marginal social cost equals $60,000. O marginal private cost is more than $40.000. O marginal external cost equals $60,000. O marginalexternal cost equals $80,000.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How do taxes, pollution charges, and cap-and-trade work to reduce emissions? When a cap-and-trade is implemented _______.
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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 $450 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 $450 per ton, 1500 PRICE (Dollars per ton of paper) 1350 1200 1050 900 750 600 450 300 150 0 D O QUANTITY (Tons of paper) Supply (Private Cost) The market equilibrium quantity is Demand (Private Value) 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
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