Question 1PriceS₁ =Private CostXD₁ =Private BenefitQuantity of aviation securityFigure 5-14 shows the market for aviation security. Aviation security generatesa positive externality because people who are not airline passengers benefitfrom aviation security.Refer to Figure 5-14 to answer the following questions.1.1 In the absence of any government intervention what is the equilibriumlevel of security that airlines will supply? Using the diagram, denote thislevel, Q*. Briefly explain why this quantity is not the economically efficientlevel of aviation security.1.2 In the diagram, illustrate the presence of positive externalities in theaviation security market. Label any new curve that you draw.1.3 On your diagram identify the economically efficient level of aviationsecurity. Denote this level Qe.1.4 Explain how a government subsidy for the airlines can bring about theeconomically efficient aviation security level. Be sure to identify the size of thesubsidy.

Question 1.1In the absence of any government intervention, the equilibrium level of security that…

Answered: Question 1 Price S₁ = Private Cost X D₁…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Melissa, a physical therapist, develops a stretching routine that relieves back pain. Her clients can perform this routine without diminishing others’ ability to perform the routine, which implies that Melissa’s stretching routine is… rival non-rival excludable a common-resource good
Example: Question 4a.) Arthur’s demand to reduce electric and magnetic fields (EMFs) is P = 20 – 2 Q, whileRonald’s demand is P = 15 – 3 Q. If the marginal cost of reducing emissions is equal to$15 and is constant, what is the optimal amount of EMF reduction? b.) What Lindahl prices would you charge Arthur and Ronald? What might prevent you fromcollecting these prices?c.) How would your answers change if the marginal cost of reducing emissions was equal to$10 and is constant?d.) What are the consumer surpluses of Arthur and Ronald in c.)?
Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.
Question is in the photo! Thank you so much!
Based on the graph:a. In this market, how much is the external cost from the production of each unit of tobacco? To reach the social optimum, should the government provide a subsidy or impose a tax? If so, how much tax or subsidy? b. Is there a deadweight loss in this market? If so, why is there a deadweight loss?
1. In Town A there is only one newspaper, Daily Outrage. The demand for the paper depends on the price and the amount of scandal reported. The demand function is Q = 15SP-3 where Q is the number of issues sold per day, S is the number of column inches of scandal reported in the paper, and P is the price. Scandals are not a scarce commodity in town A, but it takes resources to write, edit, and print stories of scandal. The cost of reporting S units of scandal is £10S and is independent of the number of papers sold. In addition, the cost to print and deliver the paper is £0.10 per copy and is independent of the amount of scandal reported in the paper. (a) Calculate the price elasticity of demand. Explain whether the price elasticity depends on the amount of scandal reported and whether the price elasticity is constant over all prices. Comment on the price sensitivity of the readers of the Daily Outrage. (b) Calculate the profit maximising price using the formula that writes marginal…
2. Given the demand function of motorcycle: Q = 500 – 100P where Q is total quantity demanded (unit: 10,000) and P is daily price (in unit of US$). (1) If the current daily price is US$1.0, please find the total quantity demanded. (2) If the external costs of motorcycle ($2) are all internalized, what would be the total quantity demanded? (3) Please also discuss impacts of this internalization policy on supply, demand and public infrastructures.
7.
Suppose the following graph shows the demand for, and supply of, apartments in New York City. Use the black point (plus symbol) to indicate the equilibrium monthly rent and quantity of apartments in the absence of price controls. Then use the green point (triangle symbol) to fill the area representing consumers' surplus, and use the purple point (diamond symbol) to fill the area representing producers' surplus. MONTHLY RENT (Dollars per apartment) 2800 2600 2400 2200 2000 1800 0 Demand Supply 0.8 3.2 QUANTITY OF APARTMENTS (Millions per month) 1.6 2.4 4.0 Equilibrium A CS PS ?
Consider a club promoter who wants to build a night club right next to your apartment building. You and your neighbors will be able to hear the music in your apartments late into the night. In this case, the club‟s owners and attendees may both be quite satisfied with their voluntary exchange, but you have no voice in their market transaction. The effect of market exchange on a third party who is outside or “external” to the exchange is called an externality. What kind of externality do you think this club example may provide?
The diagram belew gives informetion about demand and supply for robots in Econland 13 12 11 10 $ 9 8. 4. 012 3 4 5 6 7 89 10 Suppose that each robot in Econland creates a $5 positive externality because of how they make neighborhoods a safer place. What is the consumer surplus of Econland in the free market? (Note: A common question here is whether you should include the externality or not. This is part of this question for you to decide on whether to do so or not.) O -12.5 O 37.5 O 17.5 O75 O 12.5 432109876543210
1

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