Part 2- Graph It- The graph below shows an unregulated market for high powered consumerfireworks. Assume that each box of fireworks generates $40 of external costs on society and that thedemand equals the marginal social benefit.Price3. Identify the equilibrium price and quantityproduced by the unregulated market.$80Supply4. Add a marginal social cost (MSC) curve tothe graph and identify the socially optimalprice and quantity.S70S60$505. At the quantity of 50 boxes of fireworks,shade in the area of deadweight loss.$40$306. Assume that the government imposes a $20per unit tax on fireworks. Does this policyeliminate deadweight loss? Explain.$20$10DemandO 10 20 30 40 50 60 70 80Quantity (boxes)

Externalities are essential in economics because they represent the unanticipated consequences of…

Answered: Part 2 - Graph It-The graph below shows…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Viral infections such as flu are highly contagious. The number of infections and thus the spread of the disease can be prevented by getting vaccinated. However, the decision to take vaccine is voluntary and some people choose not to go for it for various reasons.] [What type of externality occurs by getting vaccinated against contagious diseases? Explain your answer in 100 words or less. [In a diagram, show the market equilibrium quantity of the vaccine. Is the quantity also socially efficient? Explain in 100 words or less and demonstrate using the same diagram. [Suggest one method to achieve a socially efficient outcome. Explain your answer in 100 or less words.
Define the concept of a negative externality and explain the nature of the negative externality in the fishing markets i.e. describe how the self-interested actions of a fishing company might adversely affect third parties without their consent.
1. Brazilian rain forests reduce global air pollution and support biodiversity. Rain forests are being cut down to support expanded production of beef for export to the US and other countries. 1. Concisely describe the market failure that leads Brazil to reduce the size of its rain forest. 2.Graph the market for beef in the US showing both the unregulated and efficient outcome. 3.In the efficient market, the negative externalities of deforestation are factored into the market price, which leads to a lower quantity of beef produced (Q2) and a higher price (P2) than in the unregulated market. 4.Explain how a tax on beef in the US would impact the price and quantity of beef and the quantity of air pollution. Graph the market for beef with a tax and discuss if/how efficiency changes after the tax. 5.A second proposal is to subsidize the development of meat substitutes (e.g. Beyond Beef, Impossible Meat, etc). Graph the impact of the entry of meat substitutes on the market for…
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for electric cars. Suppose that a electric car manufacturing facility dumps sludge into a nearby river, creating a negative externality for those living downstream from the facility. Producing additional electric cars imposes a constant per-unit external cost of $600. The following graph shows the demand (private value) curve and the supply (private cost) curve for electric cars. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $600 per unit. PRICE (Dollars per unit of electric cars) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 0 + 1 O □ ☐ O 2 3 4 5 QUANTITY (Units of electric cars) The market equilibrium quantity is ☐ Supply (Private Cost) 6 Demand (Private Value) 7 Social Cost (?) units of electric cars, but the socially optimal quantity of electric car production is To create an incentive for the firm to produce the socially optimal…
2. A perfectly competitive market exists for almonds. Demand for almonds is Q= 200 – P where P is the price of almonds and Q is the total quantity of almonds. The private total Q? The production of almonds cost for the unregulated market is C 50 + 80Q + Q² First, solve for the 2 creates an externality where the total external cost is E = Pigouvian tax (per unit of output of almonds) that results in the social optimum. Suppose that one company, MegaAlmonds, becomes a monopolist in the production of almonds. What is the optimal tax that should be placed on the almonds in this case?
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Refer to Figure. The graph represents a market in which 24 22 22 Price 18 16 81 Social cost (private cost and external cost) Supply (private cost) Demand (private valne) 120 160 Quantity a. Othere is no externality. b. Othere is a positive externality. c. Othere is a negative externality. d. The answer cannot be determined from inspection of the graph.
9
Table 17-4 Only two firms, ABC and XYZ, sell a particular product. The following table shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost. 0000 Price (Dollars per unit) a. 70 Ob.35 Ⓒ25 d. 50 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 Refer to Table 17-4. What is the socially efficient quantity of the product? Quantity Demanded (Units) 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 Total Revenue (Dollars) 0 130 240 330 400 450 480 490 480 450 400 330 240 130 0
The following table shows how the marginal benefit of a service varies for five consumers. Quantity 1 2 3 4 Serkan 150 125 100 75 Asuman 125 100 75 50 Bahar 100 75 50 25 Murat 200 150 125 125 Meriç 600 400 200 150 Derive the demand curve for this service assuming that it is a public good. If marginal cost of the good is 850, what is the efficient output of the public good? If marginal cost of the good is 425, what is the efficient output of the public good? If marginal cost of the good is 850, what is the efficient output assuming it is private good?
Only typed answer You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 3Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 14Q. Instruction: Round your answers to the nearest two decimal places. a. What is the socially efficient level of output? units b. Given these costs and market demand, how much output would a competitive industry produce? units c. Given these costs and market demand, how much output would a monopolist produce? units d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output. Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit. Pollution taxes…
4 This is a graph reprinted from Section 12.1 the Economics of Pollution. Please explain the graph with particular attention paid to why there are two supply curves. How can a government use this graph to establish pollution controls?

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