Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive.The following graph shows the market for alcohol.Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflectthis difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect thisdifference.Price of AlcoholQuantity of AlcoholSupplyDemandDemandSupplyQMarketQOptimum+++Deadweight Loss? Price of AlcoholQuantity of AlcoholSupplyDemandDemandSupplyA deadweight loss occurs because the social value of alcohol consumptionQMarketQOptimumDeadweight LossUse the black point (plus symbol) to indicate the market equilibrium level falls short of use the grey point (star symbol) to indicate the efficientlevel of output in this case.exceedsUse the black triangle (plus symbols) to shade the area representing deadweight loss.the social cost at the market equilibrium.

Externalities: The economic tasks that are performed by firms and industries such as production have…

Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive. The following graph shows the market for alcohol. Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflect this difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect this difference. Price of Alcohol Quantity of Alcohol Supply Demand Demand Supply Market QOptimum + Deadweight Loss

Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive. The following graph shows the market for alcohol. Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflect this difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect this difference. Price of Alcohol Quantity of Alcohol Supply Demand Demand Supply Market QOptimum + Deadweight Loss

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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