Name: Name: Name: $/unit 25 1 Fertilizing Fish When farmers fertilize their fields, the nitrogen from the fertilizer can get washed into streams which then feed into larger rivers. This "runoff" can cause damage to ecosystems and reduce the number of fish that can be caught by fishermen farther downstream. 20 Who are the producers of fertilizer? Who are the consumers of fertilizer? Who are the third parties affected by the externality? The graph below shows the market for fertilizer where P=2+0.5Q, and P = 20 - Qd. The marginal external cost of fertilizer = Q. This means, for example, if 3 units of fertilizer are used then the last unit of fertilizer causes fishermen to suffer a $3 loss...however, they are worse off by $1 from the first unit and $2 from the second unit as well for a total welfare loss of $6. What is the equation for your new curve? Label the curves on the graph, indicating if they're S or D, private or social. Draw & label a new curve demonstrating the externality. 15 10 5 5 Fertilizer 10 ECON102 TPS 5 15 Psoc Email ID: Email ID: Email ID: 20 25Units of Fertilizer Pmkt Qmkt What is the optimal tax? $ What quantity will be consumed if the optimal tax is implemented? @psu.edu @psu.edu @psu.edu soc (flip the paper over!)
Name: Name: Name: $/unit 25 1 Fertilizing Fish When farmers fertilize their fields, the nitrogen from the fertilizer can get washed into streams which then feed into larger rivers. This "runoff" can cause damage to ecosystems and reduce the number of fish that can be caught by fishermen farther downstream. 20 Who are the producers of fertilizer? Who are the consumers of fertilizer? Who are the third parties affected by the externality? The graph below shows the market for fertilizer where P=2+0.5Q, and P = 20 - Qd. The marginal external cost of fertilizer = Q. This means, for example, if 3 units of fertilizer are used then the last unit of fertilizer causes fishermen to suffer a $3 loss...however, they are worse off by $1 from the first unit and $2 from the second unit as well for a total welfare loss of $6. What is the equation for your new curve? Label the curves on the graph, indicating if they're S or D, private or social. Draw & label a new curve demonstrating the externality. 15 10 5 5 Fertilizer 10 ECON102 TPS 5 15 Psoc Email ID: Email ID: Email ID: 20 25Units of Fertilizer Pmkt Qmkt What is the optimal tax? $ What quantity will be consumed if the optimal tax is implemented? @psu.edu @psu.edu @psu.edu soc (flip the paper over!)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Name:
Name:
Name:
$/unit
25
1 Fertilizing Fish
When farmers fertilize their fields, the nitrogen from the fertilizer can get washed into streams which then
feed into larger rivers. This "runoff" can cause damage to ecosystems and reduce the number of fish that
can be caught by fishermen farther downstream.
20
Who are the producers of fertilizer?
Who are the consumers of fertilizer?
Who are the third parties affected by the externality?
The graph below shows the market for fertilizer where P=2+0.5Q, and P = 20 - Qd.
The marginal external cost of fertilizer = Q. This means, for example, if 3 units of fertilizer are used then
the last unit of fertilizer causes fishermen to suffer a $3 loss...however, they are worse off by $1 from the
first unit and $2 from the second unit as well for a total welfare loss of $6.
What is the equation for your new curve?
Label the curves on the graph, indicating if they're S or D, private or social. Draw & label a new curve
demonstrating the externality.
15
10
5
5
Fertilizer
10
ECON102 TPS 5
15
Psoc
Email ID:
Email ID:
Email ID:
20 25Units of Fertilizer
Pmkt
Qmkt
What is the optimal tax? $
What quantity will be consumed if the optimal tax is implemented?
@psu.edu
@psu.edu
@psu.edu
soc
(flip the paper over!)
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