MINDTAP Aplia Homework: Externalities and the Environment 2. Market solutions to correct for negative externalities This problem asks you to examine the costs in the market for gasoline. The cost of consuming gasoline comes in two parts: 1. First, the driver pays the market price for a gallon of gasoline 2. In addition, other people who live in the area bear a cost because they suffer from the pollution created by consuming gasoline; this is the external cost of consuming gasoline. Because external costs result from the consumption of gasoline, the marginal social cost of gasoline exceeds the marginal private cost. The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 7 Demand Ssocial ch End PgUp F11 DII PrtScn Home F2 F3 F4 F5 F6 F7 F8 F9 F10 23 24 & ) 8. 9- R T Y U D F G H J K L く 3. ollars per gallon) y Blackboard Content- Blackboard Learn Website The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 6. Demand S. social 3 S. private 16 24 32 40 48 56 QUANTITY (Millions of gallons of gasoline) According to the graph, if the government does not intervene in the market for gasoline, the equilibrium price of a gallon of gasoline will be $ earch DII PrtScn Home End PgUp F11 F2 F3 F4 F5 F6 F7 F8 F9 F10 2$ ) л 8. 9. T Y P D F G H J K E. PRICE (Dollars per gallon) 7,
MINDTAP Aplia Homework: Externalities and the Environment 2. Market solutions to correct for negative externalities This problem asks you to examine the costs in the market for gasoline. The cost of consuming gasoline comes in two parts: 1. First, the driver pays the market price for a gallon of gasoline 2. In addition, other people who live in the area bear a cost because they suffer from the pollution created by consuming gasoline; this is the external cost of consuming gasoline. Because external costs result from the consumption of gasoline, the marginal social cost of gasoline exceeds the marginal private cost. The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 7 Demand Ssocial ch End PgUp F11 DII PrtScn Home F2 F3 F4 F5 F6 F7 F8 F9 F10 23 24 & ) 8. 9- R T Y U D F G H J K L く 3. ollars per gallon) y Blackboard Content- Blackboard Learn Website The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 6. Demand S. social 3 S. private 16 24 32 40 48 56 QUANTITY (Millions of gallons of gasoline) According to the graph, if the government does not intervene in the market for gasoline, the equilibrium price of a gallon of gasoline will be $ earch DII PrtScn Home End PgUp F11 F2 F3 F4 F5 F6 F7 F8 F9 F10 2$ ) л 8. 9. T Y P D F G H J K E. PRICE (Dollars per gallon) 7,
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:MINDTAP
Aplia Homework: Externalities and the Environment
2. Market solutions to correct for negative externalities
This problem asks you to examine the costs in the market for gasoline.
The cost of consuming gasoline comes in two parts:
1. First, the driver pays the market price for a gallon of gasoline
2. In addition, other people who live in the area bear a cost because they suffer from the pollution created by consuming gasoline; this
is the external cost of consuming gasoline.
Because external costs result from the consumption of gasoline, the marginal social cost of gasoline exceeds the marginal private cost.
The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and
consuming gasoline.
7
Demand
Ssocial
ch
End
PgUp
F11
DII
PrtScn
Home
F2
F3
F4
F5
F6
F7
F8
F9
F10
23
24
&
)
8.
9-
R T Y U
D F G H J K L
く
3.
ollars per gallon)
Transcribed Image Text:y Blackboard Content- Blackboard Learn
Website
The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and
consuming gasoline.
6.
Demand
S.
social
3
S.
private
16
24
32
40
48
56
QUANTITY (Millions of gallons of gasoline)
According to the graph, if the government does not intervene in the market for gasoline, the equilibrium price of a gallon of gasoline will be $
earch
DII
PrtScn
Home
End
PgUp
F11
F2
F3
F4
F5
F6
F7
F8
F9
F10
2$
)
л
8.
9.
T Y
P
D F G H J K
E.
PRICE (Dollars per gallon)
7,
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