Policymakers are provided data about the private and social benefits of a good being sold in the market.Quantity Private MB ($) Social MB ($)49.5476.2573What is the size of the externality? If the externality is positive, enter a positive number. If negative, make it a negative number.Enter numeric valueGiven this data, policymakers must decide whether to address the associated externality with a subsidy or a tax. As theireconomic consultant, which of the two policy tools would you recommend?a subsidya tax

Private benefit is the benefit obtained from the consumption or production of a good by an…

Answered: olicymakers are provided data about the…

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 of the following is an example of an activity generating a positive externality? O A. You buy a new car and then find $5,000 in the door panel. OB. Your next-door neighbor mows the lawn at 6 am. C. Your next-door neighbor installs a bat house and the bats eat mosquitoes. D. After Joe buys health insurance, he decides to quit smoking.
Which of the following is an exampleof a negative externality? A. Abeekeeper selling honey at a farmers'market B. A factory emittingpollutants into the air C. A restaurantoffering a discount to senior citizensD. A farmer using organic farmingmethods.
Compared to a good with no externalities, a good with a negative externality will appear to have experienced a Increase in Supply ODecrease in Supply Olncrease in Demand i ODecrease in Demand i at each corresponding price.
QUESTION 43 Which of the following is an example of the "free rider problem?" O A consumer uses a grocery coupon to receive one free can of beans when they buy one. O Getting a free ice cream at Graeters since you have eamed enough points fro the cone. O Drivers on the new public highway towards the Intel site. OA thief steals someone's walet and uses the cash to buy lunch. QUESTION 44 In the presence of a negative externality the costs of production only incurred by the firm are O a. The external costs Ob The exterior costs Oc Private cost Od. The public costs. QUESTION 45 The wage is to labor as O a Rent is to entrepreneurship O b. Price is to human capital Oc. Interest is to economic capital O d. Profit is to financial capital. A
1. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a v externality. The following graph shows the demand and supply curves for a good with this typé of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good.
in the town of Externalia, vaccination programs create additional benefits to the community, beyond the consumers who actually purchase vaccinations The graph on the right shows the market for vaccinations 11 Using the line drawing tool, show a ine representing the true demand for vaccinations, if the external benefit were taken into account Label your line D 2) Using the point drawing tool show the new equibrium price and quantity Label your point E Carefully follow the instructions above, and only draw the required objects Price (5) Qo Quantity of vaccinations (housands)
A negative externality means the quantity in the market is _____ the allocatively efficient quanitity and can be corrected by a _____. A positive externality means the quantity in the market is _____ the allocatively efficient quantity and can be corrected by a ______. Word Bank: Larger than, tax, smaller than, subsidy, smaller than, equal to, subsidy, larger than, equal to, tax.
Some economists claim that early child care generates an external benefit to society. a. What is the market equilibrium? What is the socially optimal outcome? How do they differ? b. The government is planning to provide a per-unit subsidy for child care to achieve the socially optimal outcome. How large should this subsidy be? c. How much is the total government subsidy each month to reach a socially optimal outcome?
Consider the market for fire extinguishers. d. If the external benefit is $10 per extinguisher,describe a government policy that would yield theefficient outcome.
Review the graph below to answer this question. This graph reflects a being. produced. Price Popt. EX P1 Q opt. Q1 Quantity MSC MPC MSB _____externality where, at point Q1, the good is
Suppose the hot sauce firm cannot reduce the externality without reducing costs. What is a possible next step the government could take to reduce it? Select all that apply. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Tax the firm for each bottle of hot sauce produced. a b C d e Create a limit on the maximum number of bottles the firm can make. Subsidizing each bottle of hot sauce made. Not allowing consumers to buy hot sauce. Forcing the firm to install equipment to reduce the amount of pollution generated. Answered Incorrect 1 attempt left Resubmit
Some economists claim that early child care generates an external benefit to society. Use the below graph to answer the following questions. Price ($ per month) Supply 1,300 1,200 1,000 900 Marginal Social Benefit 1. Marginal Private Benefit 23 26 Quantity (millions per month) What is the market equilibrium? What is the socially optimal outcome? How do they differ? a. b. The government is planning to provide a per-unit subsidy for child care to achieve the socially optimal outcome. How large should this subsidy be? с. How much is the total government subsidy each month to reach a socially optimal outcome?

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