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Describe externalities as a source of market failure with the aid of a clearly labeled diagram.
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- Consider the positive externality graph If firms are able to ignore the benefit to society, which of the following statements is correct? Price ($) P* P₁ Private 0 Qp Private MSC MSB Dprivate Quantity (in units)This is not a law question.The four categories present potential responses to environmental problems. Place each response in the category that best matches it. It is possible that a category may end up with more than one scenario or none at all. Command‑and‑control regulation (e.g., environmental standards) Marketable or tradable pollution permits (e.g., cap‑and‑trade) Pollution or emissions tax Well‑defined property rights The government requires that auto manufacturers limit pollution to a specified threshold. An auto manufacture is charged a fee per unit of pollution emitted into a river. Auto manufactures are allowed to pollute as much as they wish, provided that they have purchased a sufficient number of pollution vouchers. The government requires that auto manufacturers use new, cleaner technology in producing cars. A steel mill pays nearby homeowners to compensate them for the noise they must put up with as a result of the steel manufacturing process.
- Which of the following is NOT a possible way of solving an externality problem of electricity production using coal? A. A quota of electricity production using coal exactly equal to the production level in the socially optimal allocation. B. A ban on coal burning, in order to force the use of alternative energy sources. C. Issue trading rights to burn coal for electricity production, and let a market decide the clearing price for those rights. D. A per-unit tax on the electricity price equal to marginal external cost of burning coal at the socially efficient allocation.Suppose supply is P= ―3 + (2/5)Qs and demand is P= 51 ― (1/10)Qd. Further, suppose that each unit carries a negative externality that costs someone in society $4. What is the socially optimal quantity, and how much would buyers need to pay and producers need to receive to achieve that outcome?Describe one function of government in the economy other than correcting externalities. Provide an example.
- suggest a potential solution to that student's problem. How would you internalize their externality or dissuade the free riding? A time I have experienced negative externality would be air pollution. The wild-fires in Canada have caused a tremendous amount of air pollution (smoke), while these fires are 'controlled' they have gotten out of hand and aren't benefiting the public. The smoke has created an unhealthy air level and can in some cases cause death, going outside I can clearly see the smoke that has traveled and I can smell it. Some of my friends have to stay inside because of health conditions, although it was meant to prevent a larger fire it has created a larger problem as it has gotten out control. This is problematic because there's almost no way of clearing up the smoke and people who will suffer from its outcome will not receive any compensation. It will also effect wild-life and plants, it will be hard to reverse the effects of this fire and the harm it has done. With…For each of the goods, identify the characteristics that describe each good. Note that each good will be described with two characteristics. Rivalrous is also referred to as rival in consumption. Consider only the immediate benefits and costs, not any externalities. National Defense Pay- Per- View Cable Television A Hot Pocket Sandwich Private Classroom Education Pajamas A unicycle Excludable Nonrivalrous Nonexcludable RivalrousPlease answer correct both are please answer
- Knowledge creates positive externality; therefore, governments should intervene in the education sector. What is the intervention action of governments for efficiency to gain from external benefits? Please explain each of these interventions with a clear example for each.Fill in the blanks: There is ____________ in an economy with positive externality. This problem can be dealt with by providing a _______ to the individual(s) creating the positive externality.The government wants to address the pollution associated with the production of a good by introducing a tax on negative externality. The government is unsure about the magnitude of the negative externality (social cost of pollution) and hence it is considering two options: a high tax and a low tax option. Which statement(s) is/are true? Mark all that applies. Group of answer choices The government’s tax revenue will be higher under the high tax option. The government’s tax revenue may not be higher under the high tax options. The consumption level of the good may be lower under the high tax option. Regardless of whether the high tax or the low tax option is introduced, the cost of the tax is still lower than the social cost of pollution. Both high tax and low tax options are cost-effective in achieving a given level of pollution reduction as long as the same tax applies to all polluting sources. Only the high tax option is cost-effective.
