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Question 5 (5 points) Examine the provided graph illustrating a market with an externality. The graph includes curves for private and social costs and/or benefits. Use the information to answer thefollowing questions about market efficiency, externalities, and potential interventions. 134 12 11 10 Sp DS Social Derivate Private 10 15 20 25 30 40 45 Quantity (q) If the government wanted to internalize this externality and help the market reach the Socially Optimal Quantity and Price using a market-based solution, which course of action would be best? Tax consumers on each unit purchased. Tax producers on each unit sold. Regulate the quantity of this good by setting a maximum amount that can be produced and sold. Offer a subsidy to producers for each unit sold. Offer a subsidy to consumers for each unit purchased. Think about the market externality you have just analyzed and the specific, real-world examples of externalities that we have discussed in class: which of the following phenomena is the most likely culprit for the market outcomes observed above... Electric Vehicles: Driving an electric vehicle reduces air pollution, benefiting the environment and others in the area. Overfishing: Depleting fish stocks disrupts marine ecosystems and reduces availability for others who depend on the resource. Driving Cars: Congestion and air pollution from personal car use negatively impact other drivers and the environment. Research and Development (R&D): A company's innovations often lead to technological advances that other firms and society can use Press to submit and check answers (3/3 submissions remain)

Question 5 (5 points) Examine the provided graph illustrating a market with an externality. The graph includes curves for private and social costs and/or benefits. Use the information to answer thefollowing questions about market efficiency, externalities, and potential interventions. 134 12 11 10 Sp DS Social Derivate Private 10 15 20 25 30 40 45 Quantity (q) If the government wanted to internalize this externality and help the market reach the Socially Optimal Quantity and Price using a market-based solution, which course of action would be best? Tax consumers on each unit purchased. Tax producers on each unit sold. Regulate the quantity of this good by setting a maximum amount that can be produced and sold. Offer a subsidy to producers for each unit sold. Offer a subsidy to consumers for each unit purchased. Think about the market externality you have just analyzed and the specific, real-world examples of externalities that we have discussed in class: which of the following phenomena is the most likely culprit for the market outcomes observed above... Electric Vehicles: Driving an electric vehicle reduces air pollution, benefiting the environment and others in the area. Overfishing: Depleting fish stocks disrupts marine ecosystems and reduces availability for others who depend on the resource. Driving Cars: Congestion and air pollution from personal car use negatively impact other drivers and the environment. Research and Development (R&D): A company's innovations often lead to technological advances that other firms and society can use Press to submit and check answers (3/3 submissions remain)

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter10: Externalities
Section: Chapter Questions
Problem 1QR
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Question 5 (5 points) Examine the provided graph illustrating a market with an externality. The graph includes curves for private and social costs and/or benefits. Use the information to answer thefollowing questions about market efficiency, externalities, and potential interventions. 134 12 11 10 Sp DS Social Derivate Private 10 15 20 25 30 40 45 Quantity (q) If the government wanted to internalize this externality and help the market reach the Socially Optimal Quantity and Price using a market-based solution, which course of action would be best? Tax consumers on each unit purchased. Tax producers on each unit sold. Regulate the quantity of this good by setting a maximum amount that can be produced and sold. Offer a subsidy to producers for each unit sold. Offer a subsidy to consumers for each unit purchased. Think about the market externality you have just analyzed and the specific, real-world examples of externalities that we have discussed in class: which of the following phenomena is the most likely culprit for the market outcomes observed above... Electric Vehicles: Driving an electric vehicle reduces air pollution, benefiting the environment and others in the area. Overfishing: Depleting fish stocks disrupts marine ecosystems and reduces availability for others who depend on the resource. Driving Cars: Congestion and air pollution from personal car use negatively impact other drivers and the environment. Research and Development (R&D): A company's innovations often lead to technological advances that other firms and society can use Press to submit and check answers (3/3 submissions remain)
Transcribed Image Text:Question 5 (5 points) Examine the provided graph illustrating a market with an externality. The graph includes curves for private and social costs and/or benefits. Use the information to answer thefollowing questions about market efficiency, externalities, and potential interventions. 134 12 11 10 Sp DS Social Derivate Private 10 15 20 25 30 40 45 Quantity (q) If the government wanted to internalize this externality and help the market reach the Socially Optimal Quantity and Price using a market-based solution, which course of action would be best? Tax consumers on each unit purchased. Tax producers on each unit sold. Regulate the quantity of this good by setting a maximum amount that can be produced and sold. Offer a subsidy to producers for each unit sold. Offer a subsidy to consumers for each unit purchased. Think about the market externality you have just analyzed and the specific, real-world examples of externalities that we have discussed in class: which of the following phenomena is the most likely culprit for the market outcomes observed above... Electric Vehicles: Driving an electric vehicle reduces air pollution, benefiting the environment and others in the area. Overfishing: Depleting fish stocks disrupts marine ecosystems and reduces availability for others who depend on the resource. Driving Cars: Congestion and air pollution from personal car use negatively impact other drivers and the environment. Research and Development (R&D): A company's innovations often lead to technological advances that other firms and society can use Press to submit and check answers (3/3 submissions remain)
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