(Figure: The Quantity of Pollution in Coal Production) Use Figure: The Quantity of Pollution in Coal Production. Whethis economy produces 50 tons of emissions:MSB, MSC20015010050MSB200Quantity of pollutionemisions (tons)it is producing below the socially optimal level of output.the marginal social cost equals the marginal social benefit.it is producing at its socially optimal level of output.the marginal social cost is greater than the marginal social benefit.050MSC100 150

The optimal quantity is where the marginal social benefit is equal to the marginal social cost.…

(Figure: The Quantity of Pollution in Coal Production) Use Figure: The Quantity of Pollution in Coal Production. Who this economy produces 50 tons of emissions: MSB, MSC 200 150 100 50 0 50 MSC MSB 200 Quantity of pollution emisions (tons) 100 150 it is producing below the socially optimal level of output. the marginal social cost equals the marginal social benefit. it is producing at its socially optimal level of output. the marginal social cost is greater than the marginal social benefit.

(Figure: The Quantity of Pollution in Coal Production) Use Figure: The Quantity of Pollution in Coal Production. Who this economy produces 50 tons of emissions: MSB, MSC 200 150 100 50 0 50 MSC MSB 200 Quantity of pollution emisions (tons) 100 150 it is producing below the socially optimal level of output. the marginal social cost equals the marginal social benefit. it is producing at its socially optimal level of output. the marginal social cost is greater than the marginal social benefit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 marginal external cost (MEC) of $165 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for steel. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $165 per ton. PRICE (Dollars per ton of steel) 1100 990 880 770 660 550 440 330 220 110 0 0 + 1 O ☐ O 2 0 H 3 ▬ The market equilibrium quantity is O 4 5 QUANTITY (Tons of steel) ☐ ☐ 6 Supply (MPC) Demand (MPB) 7 MSC ? tons of steel, but the socially optimal quantity of steel production is To create an incentive for the firm to produce the socially optimal quantity…
(Figure: The Socially Optimal Quantity of Emissions from Coal Production) Use Figure The Socialy Optimal Quarety of Emissions from Coal Production in the figure, firms are the only beneficiaries of polution, and costs are borne solely by others in the society. Without government intervention Marginal social cost, marginal social benefit MSC of pollution MSB of pollution Quantity of pollution emissions (tons) O The outcome cannot be determined without more information Orms will continue to polute until the marginal benefit to them is $200 O firms will continue to pollute until the marginal benate to them is zero. O the quantity of pollution will be optimal.
(Table: City Sanitation in Winnetka) Use Table: City Sanitation in Winnetka. Suppose that the marginal cost of each street cleaning is $6. How many street cleanings will there be? Table: City Sanitation in Winnetka Number of Street Cleanings 10 1 2 3 14 QUESTION 29 5 05 03 2 Edwin's Total Benefit Geraldine's Total Benefit $0 10 18 24 28 30 $0 18 15 21 26 30
2. The effect of negative externalities on the optimal quantity of 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 tonne of paper imposes a constant external cost of $105 per tonne. 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 tonne. (?) paper) PRICE (Dollars per tonne 700 630 560 490 420 350 280 210 140 70 0 0 ◇ 1 0 2 O 3 e O O The market equilibrium quantity is 3.5 O QUANTITY (Tonnes of paper) D Supply (Private Cost) Demand (Private Value) 7 Social Cost tonnes of paper, but the socially optimal quantity of paper production is 3 To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a tax tonne of…
3. If the government issues tradeable pollution permits, does it matter for economic efficiency (social welfare) whether all firms receive the same amount of permits, or whether some firms receive more permits than others?
5. The marginal benefits (MB) and marginal damage costs (MD) for daily particulate air pollution in East St. Louis, Illinois are given in the following figure: $ per pound per day 2 MB MD 1 Pounds 1,000 2,000 per day a. What is the efficient level of pollution in pounds per day? Explain. b. If East St. Louis imposes an absolute ban on particulate pollution, how large would be the deadweight loss? (Be quantitative.) c. If instead of an absolute ban, the city levels a Pigouvian tax on polluters, how large should it be per pound per day to achieve efficiency? What will be the total revenues to the government? What will be the gain or loss to residents compared to the absolute ban? What will be the after tax gain or loss to polluters compared to the absolute ban? d. If instead of an absolute ban, the right to be free of pollution is given to the residents and they are allowed to bargain with the polluters, what level of pollution will Coase expect to be bargained between polluters and…
part B
2. Study Questions and Problems #2 Suppose a car sells for $21,000 in a market with no pollution restrictions. When there are pollution restrictions, the car will sell for $21,000.
Help plz graph plz 3 8
Figure: Three Firms That Pollute Reference: Ref 16-3 Figure: Three Firms that Pollute (Figure: Three Firms that Pollute) Use Figure: Three Firms That Pollute. In the figure, at what tax rate would firm C produce positive amount of pollution? Select one: a. $400 b. $500 c. $700 d. $200
1) when do externalities occur ? (Full in-depth sentence) 2) What are some examples of effects that are externalities versus effects that are not externals? 3) how exactly do we model externalities with Demand, Supply, Marginal Cost, and Marginal Benefit. (Show in a graph for each one) 4) why are markets inefficient in the presence of externalities? 5) What are some solutions to externalities ? ( show how these work)
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