QUESTION 8 The market for good Q is perfectly competitive. However, it features negative externalities. Consumers' marginal benefit is MB = 90-Q Producers' marginal private cost is MC = Q. The production of this good generates a marginal external cost MEC=4. a) In the equilibrium of this market, the perfect competition quantity is Qpc= 45 b) The socially efficient quantity is Qsoc 43 c) To achieve efficiency, the government can introduce a
Q: Suppose the equation for the demand curve in a market is P=100 - 1.5Q. Also, suppose the equation…
A: * SOLUTION :- * The OPTION C (P=55, Q=30) is correct answer. * Explanation :-
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A: Negative externalities arise when the production or consumption of an item leads to a harmful effect…
Q: Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby…
A: Consider the market for bolts . Suppose that a hardware factory dumps toxic waste into a nearby…
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A: (Q) Automobile production imposes a negative externality. The government imposes a per-unit tax on…
Q: An externality has marginal benefits MB = 24 - 2q, marginal social benefits MSB = 24 - q and…
A: A positive externality occurs when the production and consumption of a good / service benefits a…
Q: Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby…
A: Social marginal cost:The total of the marginal external cost and the private marginal cost is the…
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A: Private benefit is the benefit obtained from the consumption or production of a good by an…
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A: MPB=Marginal Private Benefit MSB=Marginal Social Benefit MSB=MPB+MEB where MPB=marginal private…
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A:
Q: The market for good Q is perfectly competitive. However, it features negative externalities. In the…
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A: Due to positive consumption externality, MSB is more than the MB.
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A: * SOLUTION :- * The OPTION B is correct answer. *Explanation :-
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Q: D) 600; $40
A:
Q: The market for good Q is perfectly competitive. However, it features positive externalities.…
A: Given information MB=100-Q MC=Q MEB=2 Perfect competitive equilibrium exists where, MB=MC Social…
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A: Positive externality refers to positive spillover effects on the third party or the society.
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- 1. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a v externality. The following graph shows the demand and supply curves for a good with this typé of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good.The table below shows the quantities of gas demanded and supplied at different prices in a city where a tax of $0.50 per gallon is collected from sellers of gas. The marginal external cost of gas is constant at $1 per gallon. Price (S/gallon) Quantity (million gallons) Demanded Supplied 2.00 24 16 2.50 20 20 3.00 16 24 3.50 12 28 Question 10 Homework Answered Fill in the Blanks Type your answers in all of the blanks and submit In the scenario above, the marginal benefit received by gas consumers is $ the gas producers 2.50 marginal private cost (including the tax) is $ 2.50 the marginal social cost is $3 and the deadweight loss is $ million.Consider the market for steel. Suppose that a steel manufacturing plant dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the plant. Producing an additional ton of steel imposes a constant external cost of $245 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for steel. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per ton. The market equilibrium quantity is _______ tons of steel, but the socially optimal quantity of steel production is _______ tons. To create an incentive for the firm to produce the socially optimal quantity of steel, the government could impose a ___subsidy or tax______ of ______ per ton of steel.
- The marginal cost of educating a college student is $2,000 a year. The table shows the marginal benefit schedule of a college education. The marginal external benefit of a college education is a constant $1,000 per student per year. There are no public colleges. If the government subsidizes colleges and sets the subsidy so that the efficient number of students enroll, what is the subsidy per student, how many students enroll, and what is the cost to taxpayers? The subsidy is $ per student and million students enroll. Students (millions per year) 1 2 3 4 5 6 7 8 8 Marginal benefit (dollars per student per year) 5,000 3,000 2,000 1,500 1,200 1,000 800 500Refer to Figure. Which of the following statements is correct? Price 22 24 22 81 18 16 Social cost (private cost and external cost) Supply (private cost) Demand (private value) 120 160 Quantity a. The private cost of producing the 160th unit of output is $16 b. The social cost of producing the 160th unit of output is $22. c. d. The external cost of producing the 160th unit of output is $6. All of the above are correct.You are an industry analyst that specializes in an industry where the market inverse demand is P = 300 - 4Q. The external marginal cost of producing the product is MCExternal = 8Q, and the internal cost is MCInternal = 15Q.Instructions: Enter your responses rounded to the nearest two decimal places.a. What is the socially efficient level of output? unitsb. Given these costs and market demand, how much output would a competitive industry produce? unitsc. Given these costs and market demand, how much output would a monopolist produce? unitsd. 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: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.check all that apply Pollution taxes Nonrival consumption Pollution permits
- In the market for a certain pesticide, the following equations represent the private demand and supply: Private Demand: QD = 160 - P Private Supply: QS = 4P The use of this pesticide has a negative externality that affects nearby ecosystems, which is not reflected in the market price. The external cost is estimated to be $5 per unit of pesticide. By how much is the pesticide overconsumed under perfect competition? A) 1 units B) 3 units C) 4 units D) 5 units E) none of the above2. The PMB associated with a product's consumption is PMB-SMB = 360 - 4Q and the PMC = 6Q. The marginal external damage associated with this good's production is MD=2Q. To correct the externality, the government decides to impose a tax of $T per unit sold. | a) What is the level of production without pollution? b) What is the socially optimal level of production? c) What tax should the government set to achieve the social optimum? d) Explain the difference in the two values in (a) and (b)?With this type of externality, in the absence of government intervention, the market equilibrium quantity produced will be than the socially optimal quantity. Which of the following generate the type of externality previously described? Check all that apply. Your roommate Crystal has bought a puppy that barks all day while you are trying to study economics. Tim has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season. A microbiology lab has published its breakthrough in swine flu research. The local airport has doubled the number of runways, causing additional noise pollution for the surrounding residents.
- The graph below depicts a market with a positive externality. Market Price P₁ Q₁ Q₂ O Q2 O Q1 OP1 OP2 Quantity D₁ S D₂ Which label shows the quantity that reflects both the external and private benefits of consumption (social demand)?Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $90 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for bolts. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $90 per ton. PRICE (Dollars per ton of bolts 600 540 480 420 360 300 240 180 120 60 0 0 C ☐ 1 O ☐ 2 O 0 3 4 QUANTITY (Tons of bolts) 0 The market equilibrium quantity is O ☐ 5 Supply (Private Cost) Demand (Private Value) 6 7 Social Cost (?) ▼ tons of bolts, but the socially optimal quantity of bolt production is To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a $ per ton of bolts. tons. of1.) Consider the market for plastic grocery store bags. Suppose that demand for these bags is given by PD = 24 – QD and supply is given by PS = QS. These bags, after they are used, pile up in the streets and get stuck in trees, creating unattractive litter. This litter imposes a negative externality of $2 per plastic bag. a.) Compute the socially optimal quantity of plastic bags. b.) Compute the competitive equilibrium in the market for plastic bags. c.) Compute consumer surplus, producer surplus, and total surplus in the market for plastic bags in this competitive equilibrium.