QUESTION 28 Suppose that in a perfectly competitive market, the demand curve is given by P = 60 – 2Q, the supply curve is given by P = 3Q, and the social supply curve is given by P= - 10+3Q. What type of externality does this represent? O Positive production. O Negative Production. O Negative Consumption. O Positive Consumption.

QUESTION 28 Suppose that in a perfectly competitive market, the demand curve is given by P = 60 – 2Q, the supply curve is given by P = 3Q, and the social supply curve is given by P= - 10+3Q. What type of externality does this represent? O Positive production. O Negative Production. O Negative Consumption. O Positive Consumption.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter5: Difficult Cases For The Market And The Role Of Government

Section: Chapter Questions

Problem 10CQ

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Time left 0:27:07 Suppose that flu shots create a positive externality equal to $12 per shot. What is the relationship between the equilibrium quantity and the socially optimal quantity of flu shots produced? Select one: The equilibrium quantity is less than the socially optimal quantity. O a. O b. The equilibrium quantity is greater than the socially optimal quantity. Oc. They are equal. O d. No relationship exists. Next page 26°C Mostly cloudy tour on this page Type here to search
Suppose that smoking creates a negative externality. If the government does not interfere in the cigarette market, then Select one: O a. the equilibrium quantity of cigarettes smoked will be less than the socially optimal quantity of cigarettes smoked. O b. the equilibrium quantity of cigarettes smoked will be greater than the socially optimal quantity of cigarettes smoked. O .There is not enough information to answer the question. O d. the equilibrium quantity of cigarettes smoked will equal the socially optimal quantity of cigarettes smoked.
An externality exists whenever O the economy can benefit from government intervention. a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives payment for that effect. O markets are not able to reach equilibrium. O a firm sells its product in a foreign market.
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