Price of a vaccination $140 Supply 110 75 D marginal social benefit D= marginal private benefit 550 800 Quantity of vaccinations Refer to the Externality graph above. Government could increase the quantity of vaccinations by: O a. subsidizing the producer to provide the vaccinations. O b. subsidizing the consumer to receive the vaccinations. Oc. Government provides the good or service altogether. O d. none of the above. O e. A, B, and C.

Price of a vaccination $140 Supply 110 75 D marginal social benefit D= marginal private benefit 550 800 Quantity of vaccinations Refer to the Externality graph above. Government could increase the quantity of vaccinations by: O a. subsidizing the producer to provide the vaccinations. O b. subsidizing the consumer to receive the vaccinations. Oc. Government provides the good or service altogether. O d. none of the above. O e. A, B, and C.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?
Supply 10.00 9.00 8.00 7.00 6.00 MSC 5.00 4.00 Demand 3.00 2.00 1.00 25000 50000 75000 100000 125000 150000 175000 200000 If a tax or subsidy were used to correct the externality, what would be chosen? O a. tax = $4 O b. subsidy = $3 O C. tax = $3 O d. subsidy = $4 B.
Which statement about externalities is wrong? O Markets are typically not efficient in dealing with externalities O Externalities can be positive or negative O A firm naturally takes into account negative externalities that result from their production O Interventions such as carbon taxes can help correct externalities gative externalities imply that the social cost is high than the internal (or private) cost
According to economists what is the optimal amount of pollution? O a. The optimal amount of pollution is where private costs equal social costs O b. Pollution should be reduced to a level as determined by government regulation O c. None, the goal is to completely eliminate pollution d. The point where the marginal benefit from further pollution reduction equals the marginal cost of further reduction
ģi Refer to the table below, which presents information on a market that provides positive externalities on society. Private marginal benefit Marginal cost $300,000 $340,000 $310,000 $330,000 $320,000 $320,000 $330,000 $310,000 $340,000 $300,000 $350,000 $290,000 Calculate the quantity that would be produced if society did not incorporate the social marginal benefits of this good or service. Type your answer... Quantity 6,000 7,000 8,000 9,000 10,000 11,000 F1 a 2 W JAN X Q 18 F2 # 3 20 F3 F $ 4 F4 R % 5 F5 T MacBook Air A 6 F6 Y & 887 stv F7 U * 00 8 FB O ( 9 Private+social marginal benefit $360,000 $350,000 $340,000 $330,000 $320,000 $310,000 F9 1 W 0 F10 Aa zoom P F11 Submit F12 = IT ľ
Demand BA Quantity Refer to Externality graph above. Point A is the current equilibrium level of output of this product and point B is the socially optimal level of output for the society. S is the supply curve that includes private costs. St is the supply curve that includes public costs. The graph indicates that there is (arc): O a. positive externalities from product production. O b. spillover costs from the production of this product. Oc. spillover benefits to the production of this product. O d. an underallocation of resources to product production. Price %24
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)
Figure 1. The graph depicts the market for plastic containers. Price 16- 14- 12- 10 8- 6 200 500 650 Social Cost Private Cost Demand Quantity Refer to Figure 1. In order to reach the social optimum, the government could O offer a subsidy of $8 per unit on the production of plastic containers. O impose a tax of $8 per unit on the production of plastic containers. O offer a subsidy of $4 per unit on the production of plastic containers. O impose a tax of $4 per unit on the production of plastic containers.
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45 40 35 30 25 20 P ($) Social cost Supply 15 10 Demand 5 0 0 10 20 30 40 50 60 70 80 90 100 wanted to tax or subsidize this good to achieve the Refer to the figure above. If the government socially-optimal level of output, it would Select one: O a introduce a subsidy of $10 per unit. O b. impose a tax of $10 per unit. Oo impose a tax of $15 per unit. Od introduce a subsidy of $15 per unit. 8
PRICE 20 18 16 14 12 10 8 6 4 2 Figure 10-3 Social Value Supply Demand, 2 4 6 8 10 12 14 16 18 20 QUANTITY Refer to Figure 10-3. If the government wanted to tax or subsidize this good to achieve the socially optimal level of output, it would O a. introduce a subsidy of $4 per unit. O b. impose a tax of $4 per unit. O c. impose a tax of $2 per unit. O d. introduce a subsidy of $2 per unit.