Fill in the blanks counted as correct): - The efficient quantity is market price is Choose the appropriate answers from A, B, C, D, E, F, G, and H (answers that do not use these letter options will not be ; however, without any remedies, the equilibrium market quantity is and - The total deadweight loss associated with the externality is shown in this graph by areas -If the government is successful in their externality correction endeavor, that would make the after-intervention market quantity equal to and the equilibrium

Fill in the blanks counted as correct): - The efficient quantity is market price is Choose the appropriate answers from A, B, C, D, E, F, G, and H (answers that do not use these letter options will not be ; however, without any remedies, the equilibrium market quantity is and - The total deadweight loss associated with the externality is shown in this graph by areas -If the government is successful in their externality correction endeavor, that would make the after-intervention market quantity equal to and the equilibrium

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 Product NE, which has a negative externality associated with its’ production and use ( i.e., the “Incidental Cost” of each unit of Product NE is greater than zero). You are told that : * The “Efficient” Output of Product NE = 100 units * The Free-Market Equilibrium Output of Product NE = 125 units * The Total Surplus ( to society) on Unit Number 50 ( i.e., on that one unit ALONE) is equal to $ 45 * The Cumulative Surplus on the first 100 units produced is equal to $ 6,000 ( i.e., the sum of the surplus( to society) on ALL 100 units adds up to $ 6,000) Is the Consumer’s Surplus + Producer’s Surplus on Unit Number 50 ( i.e., the sum of CS + PS) greater than $ 45, less than $ 45, or exactly equal to $ 45 ( just circle your answer) ? Greater than $ 45 Less Than $ 45 Exactly $ 45 *Draw a graph to…
[The drainage of waste products from the chemical factory, Ultra Chemicals, situated along the banks of the Misty River has led to the formation of a dead zone in the river that cannot support aquatic life.] [Without any government intervention, will Ultra Chemicals produce a socially optimal quantity? Why or why not? Explain your answer in 200 words or less with the help of a suitable diagram. [Does Ultra Chemicals impose a deadweight loss on society? Explain in 100 words or less. Use your diagram to show the deadweight loss to society. [How can a government intervene to improve upon the outcome from society’s point of view? Explain in 100 words or less. Diagram not needed.
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.
What is the socially optimal quantity, and how much is the social cost at this quantity?
The restaurant industry develops an exciting new technology, a robot that quickly prepares food in half the usual time of chefs. This increases supply (producers save costs on labor) and demand (consumers find it fun to watch the robot make a meal) such that the price remains constant. However, the robot runs on coal and produces a lot of pollution, generating an external cost on production. How do consumer and producer surplus change as a result of this new technology? Choice 1 of 4:Consumer surplus increases but the change in producer surplus is indeterminateChoice 2 of 4:Producer surplus increases but the change in consumer surplus is indeterminateChoice 3 of 4:Both producer and consumer surplus increaseChoice 4 of 4:Both producer and consumer surplus decrease
I chose option D and got this wrong. I thought that when you had a positive externality The demand curve move to the right. Wouldn’t this mean that the level of output and the price would be greater than the free market ones? can you explain how my answer is wrong? What is correct?
On the basis of the three Individual demand schedules below, and assuming these three people are the only ones in the society, determine (a) the market demand schedule on the assumption that the good is a private good and (b) the collective demand schedule on the assumption that the good is a public good Instructions: Enter your answers as whole numbers (in the gray-shaded cells). Individual #1 Individual #2 Individual #3 (a) Private Demand (b) Public Demand Od Qd Price Qd Price Qd Price Price Qd Price $8 $8 $8 $8 1 1 7 2 7 2 7 2 7 2 6 3 6 3 6 3 6 3 4 4 4 4 5 5 5 4 5 5 4 5 4 5 4 3 6 6 6 3 6 2 7 2 7 2 7 2 7 1 8 1 8 1 8 1 8
Draw figures similar to the provided figure (i.e. producer curves in a perfectly competitive market including marginal social cost, marginal private cost, price) and show the deadweight losses associated with a) positive externalities b) negative externalities NOTE: take line p = 260 as the marginal benefit curve
Distinguish the true statements from the false statements. True False Market failure occurs when negative externalities are present but not when positive externalities are present. The government sometimes intervenes when a market failure occurs. Externalities are the only example of market failure. Market failure occurs when either negative or positive externalities are present. Market failure is when a market provision of a good result in an inefficient quanitity.
Let Q be the quantity of natural gas in tons from fracking. Assume fracking imposes a negative externality of $24 per ton. The private demand for natural gas from fracking is P = 200 - 4Q while the private supply curve is P = 20 + 2Q. If the government imposes a $24 tax per ton of natural gas from fracking, what is the change in the total surplus from before to after the imposition of the tax? O -$672. O $48. O $672. -$48.
Suppose the production of widgets causes a negative externality of $12 per unit. The current market price is $20 and market quantity is 35 units. What should be the correct Pigovian tax to correct the negative externality?
Suppose that engineers have discovered a new production process for this product which results in a significant positive externality. As a result of the positive externality, for every given output level Marginal Social Value (MSV1) is now higher than consumer’s marginal willingness to pay (also known as the Demand Curve shown as D0 below). Keep in mind that the setting is still that of a monopoly. 1) Please indicate on the graph above, assuming an absence of any government intervention to correct the positive externality and adding any necessary curve(s): The monopoly price P1 and the monopoly quantity Q1 under the condition of the (uncorrected) positive externality. (Also indicate, for comparison purposes, the original monopoly price P0 and monopoly quantity Q0.) The Socially Optimal output, QSO1. The resulting Consumer Surplus CS1, the resulting Producer Surplus PS1, and the size of Dead-Weight Loss DWL1 if there is such a loss. (No need to show the economic profits earned by the…