Given the position of the MSC curve, once can conclude that the PRICE OF GOOD X P₂ P₁ - H Q₁ Q₂ Q₂ Marginal Social Cost Marginal Private Cost Marginal Social Benefit QUANTITY OF GOOD X O production of Good X occurs in an imperfectly competitive market O market quantity Q3 is the socially optimal quantity O production of Good X creates a negative externality O free market will produce too little of Good X private costs of producing Good X exceed the social cost of production at all levels of output

Given the position of the MSC curve, once can conclude that the PRICE OF GOOD X P₂ P₁ - H Q₁ Q₂ Q₂ Marginal Social Cost Marginal Private Cost Marginal Social Benefit QUANTITY OF GOOD X O production of Good X occurs in an imperfectly competitive market O market quantity Q3 is the socially optimal quantity O production of Good X creates a negative externality O free market will produce too little of Good X private costs of producing Good X exceed the social cost of production at all levels of output

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which statement about externalities is wrong? O Markets are typically not efficient in dealing with externalities O Externalities can be positive or negative O A firm naturally takes into account negative externalities that result from their production O Interventions such as carbon taxes can help correct externalities gative externalities imply that the social cost is high than the internal (or private) cost
2. Consider a perfectly competitive market for steel in a small exporting country. Suppose that steel production causes local air and water pollution. Assume that the larger the steel output, the higher the social cost of pollution; thus, steel production creates a negative externality. a. Explain what type of trade tax or subsidy policy could be used to reduce the negative effects of pollution. Demonstrate the welfare effects using a partial equilibrium diagram. Assume that your policy reduces social costs by R dollars. Under what condition would the policy raise national welfare? b. Explain what type of purely domestic policy could be used to reduce the pollution. Use a partial equilibrium diagram to demonstrate the welfare effects of this policy. Again assume that your policy reduces social costs by R dollars. c. Explain why the purely domestic policy may be superior to the trade policy
Price 10 9 8 7 6 Cr 4 3 2 1 0 0 100 200 300 400 500 600 Quantity Answers typed in all of the blanks will be automatically saved. X₂ X² Ω· equilibrium, the price is 3 PMC=S 700 800 900 1,000 1,100 1,200 SWTP Consider the attached graph showing a market with a positive externality. At the competitive market and the quantity is 600 D=WTP At this competitive equilibrium, consumer surplus is Type your answer here, producer surplus is the damage to the environment is Type your answer here Type your answer here, and the total external benefits caused in the production of the good is Type your answer here. Societal welfare - the sum of consumer surplus and producer surplus less
50 – QD, and the supply of anchovy Suppose that demand for anchovy pizza is given by PD pizza is given by PS = QS. Anchovy pizza smells bad. The bad smell imposes an external cost on anyone near the pizza equal to $5 per pizza. What is the formula for the marginal cost to society of anchovy pizza? O 55 - Q O 5 + Q O Q- 5 O 45 - Q
Demand BA Quantity Refer to Externality graph above. Point A is the current equilibrium level of output of this product and point B is the socially optimal level of output for the society. S is the supply curve that includes private costs. St is the supply curve that includes public costs. The graph indicates that there is (arc): O a. positive externalities from product production. O b. spillover costs from the production of this product. Oc. spillover benefits to the production of this product. O d. an underallocation of resources to product production. Price %24
The market for plasticans is perfectly competitive. Market Supply is givenby Q=6P and Market Demand is given by Q=499-2P. Each extra unit ofplastican produced imposes a negative externality of $8. What is the totalcost of the externality at the market equilibrium?
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.
Is the answer A B C or D?
7) Issa is regularly outside of her house and tending her flowers and gardening. Her flowers are so vibrant and colorful that everyone in the neighborhood enjoys looking at them and the property prices of all the houses in the neighborhood have increased. The marginal social benefit (MSB), marginal private benefit (MPB) and marginal cost (MC) curves of her gardening activities are drawn below.
Time left 0:16:1 Suppose that elementary education creates a positive externality. If the government does not subsidize education, then Select one: the equilibrium quantity of education will be less than the socially optimal quantity of O a. education O b. the equilibrium quantity of education is optimal the equilibrium quantity of education will be greater than the socially optimal quantity of education C. Od. the equilibrium quantity of education will be equal to the socially optimal quantity of education Next page page r on this page
consider the following graph of the marginal benefits (MB) and marginal costs (MC) of producing paper. (This is not a question about externalities). Assume fixed costs are zero. Also, these aren't damages and abatement costs. $ MC MB° h f b d a Раper Suppose the firm produced at qa. Which area best represents the inefficiency associated with this level of production? o a. {e} P {f} OC {f-b} Od {e+c}
answer plzz...