**Figure 10-1 Explanation**This figure is a supply and demand graph for the tobacco industry, including an additional curve for social costs. The graph displays:1. **Axes:** - The vertical axis represents the price in dollars per unit. - The horizontal axis measures quantity in units of tobacco.2. **Curves:** - **Demand Curve:** Slopes downward from left to right, showing the inverse relationship between price and quantity demanded. - **Supply Curve:** Slopes upward, indicating a direct relationship between price and quantity supplied. - **Social Cost Curve:** Lies above the supply curve, representing the additional costs imposed on society by the tobacco industry.3. **Key Points:** - **Equilibrium (Supply and Demand Intersection):** This occurs at $2.07 and a quantity of 38 units. - **Social Cost Point:** Higher price ($3.00) and lower quantity (24 units) reflect the social cost of tobacco.**Question: Refer to Figure 10-1. This graph represents the tobacco industry. The industry creates:**- a. positive externalities.- b. no equilibrium in the market.- c. negative externalities.- d. no externalities.The presence of the social cost curve indicates negative externalities caused by the tobacco industry.

In the question above, a graph is given which shows : Price of Tobacco on Y axis Quantity of…

Social Cost Supply 3.00 2.80 2.07 1.50 Demand 24 30 38 50 QUANTITY (Units oftobacco) Refer to Figure 10-1. This graph represents the tobacco industry. The industry creates O a. positive externalities. O b.no equilibrium Lsthe market. C. negative externalities. d. no externalities. PRICE (Dollars per unit)

Social Cost Supply 3.00 2.80 2.07 1.50 Demand 24 30 38 50 QUANTITY (Units oftobacco) Refer to Figure 10-1. This graph represents the tobacco industry. The industry creates O a. positive externalities. O b.no equilibrium Lsthe market. C. negative externalities. d. no externalities. PRICE (Dollars per unit)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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