Suppose that supply and demand for vaccines can be representedby P = 100 + 3Q and P = 500-Q, respectively. Further, assume that each vaccination isassociated with a positive externality, with an estimated value of 100 monetary units.a.What is the competitive equilibrium in this market?Q = 100 and P = 400O Q = 125 and P = 375Q 125 and P = 475Q = 75 and P = 425None of the othersCalculatorRegarding the socially efficient outcome, which of the following is correct?MCSocialQOpt = 125 since this is the value for which MB SocialQOpt = 125 and the total value of the externality is 100O QOpt = 100 since the deadweight loss is equal to 0O QOpt=75 and the total value of the externality is 7500None of the othersb. C.Which of the following measures could be implemented in order to correct theproblem caused by the externality?A (Pigou) tax equal to the value of the externalityA (Pigou) subsidy equal to the competitive market priceA maximum price above the competitive market priceA minimum price equal to the value of the externalityNone of the others

Competitive equilibrium In a competitive market with freely determined prices, competitive…

Suppose that supply and demand for vaccines can be represented by P = 100+305 and P = 500-Q, respectively. Further, assume that each vaccination is associated with a positive externality, with an estimated value of 100 monetary units. a. What is the competitive equilibrium in this market? OQ = 100 and P = 400 Q125 and P 375 Q=125 and P = 475 OQ = 75 and P = 425 None of the others Calculator b. Regarding the socially efficient outcome, which of the following is correct? Qºpt = 125 since this is the value for which MB Social = MC Social OQOpt 125 and the total value of the externality is 100 O QOpt = 100 since the deadweight loss is equal to 0 OQOpt75 and the total value of the externality is 7500 O None of the others

Suppose that supply and demand for vaccines can be represented by P = 100+305 and P = 500-Q, respectively. Further, assume that each vaccination is associated with a positive externality, with an estimated value of 100 monetary units. a. What is the competitive equilibrium in this market? OQ = 100 and P = 400 Q125 and P 375 Q=125 and P = 475 OQ = 75 and P = 425 None of the others Calculator b. Regarding the socially efficient outcome, which of the following is correct? Qºpt = 125 since this is the value for which MB Social = MC Social OQOpt 125 and the total value of the externality is 100 O QOpt = 100 since the deadweight loss is equal to 0 OQOpt75 and the total value of the externality is 7500 O None of the others

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given that demand for medical services is given by equation P= 250 50Q. The marginal costs for medical services are 25. The marginal external benefits of visiting a doctor are 12.5. Which of the following statements is correct: SELECT THE CORRECT ANSWER Full insurance with 200 deductible will result in the social optimum quantity to be consumed Full insurance is more efficient than no insurance A co-insurance rate of 50% would increase efficiency, but will not result in the social optimum quantity to be consumed A co-payment of 15 is less efficient than a co-insurance rate of 50%
The government wants to address the pollution associated with the production of a good by introducing a tax on negative externality. The government is unsure about the magnitude of the negative externality (social cost of pollution) and hence it is considering two options: a high tax and a low tax option. Which statement(s) is/are true? Mark all that applies. Group of answer choices The government’s tax revenue will be higher under the high tax option. The government’s tax revenue may not be higher under the high tax options. The consumption level of the good may be lower under the high tax option. Regardless of whether the high tax or the low tax option is introduced, the cost of the tax is still lower than the social cost of pollution. Both high tax and low tax options are cost-effective in achieving a given level of pollution reduction as long as the same tax applies to all polluting sources. Only the high tax option is cost-effective.
#9. A safe and effective coronavirus vaccine has positive externalities. Is it efficient for the government to provide this vaccine to everyone for free? a. Yes. Goods with positive externalities should always be free. b. Uncertain. Goods with positive externalities should be subsidized, but making them free is not necessarily efficient. c. No. According to the First Fundamental Welfare Theorem, the market will provide the efficient amount of vaccines on its own. с. d. No. Goods with positive externalities should be taxed.
There are two consumers of mosquito abatement (a public good), Dave and Lilly. Dave’s benefit from mosquito abatement is given by ??? = 100 − ?, where Q is the quantity of mosquito abatement. Lilly’s benefit is given by ??? = 60 − ?.a. Calculate the total marginal benefit, ???.b. Suppose that mosquito abatement can be provided at a marginal cost of ?? = 2?. Find the socially optimal level of abatement. c. If mosquito abatement is privately supplied, what quantity will be supplied by Dave, and what quantity will be supplied by Lilly? Briefly explain.
Now suppose the U.S. government does not know the demand curve for pollution and, therefore, cannot determine the optimal tax to achieve the desired level of pollution. Instead, it auctions off tradable pollution permits. Each permit entitles its owner to emit one ton of chemicals per day. To achieve the socially optimal quantity of pollution, the government auctions off 140 million pollution permits. Given this quantity of permits, the price for each permit in the market for pollution rights will be $----- . The previous analysis hinges on the government having good information regarding either the demand for pollution permits or the optimal level of pollution (or both). Given that the appropriate policy (tradable permits or corrective taxes) can depend on the available information and the policy goal, consider the following scenario. Suppose the government knows the optimal quantity of pollution as well as how much it costs a particular polluting firm to reduce pollution at each…
Suppose a positive externality is associated with college enrollment. Assume that college instruction is sold in a competitive market and that the marginal social cost of providing it increases with enrollment. Show how a corrective subsidy to college students will increase the market price of instruction. Show the net gain in well-being possible from the subsidy and the amount of tax revenue required to finance its costs on your graph. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Compared to a good with no externalities, a good with a negative externality will appear to have experienced a Increase in Supply ODecrease in Supply Olncrease in Demand i ODecrease in Demand i at each corresponding price.
Below is the hypothetical supply and demand diagram for iron supplements in Brazil with positive externalities. 1. Move Ej to the market's equilibrium. 2. Move E2 to the socially optimal equilibrium. Market for Iron Supplements 5.0 E 1 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 D social D internal 0.5 0.0 100 200 300 400 500 600 700 800 900 1,000 Quantity (thousands) Price ($)
An externality, which is sometimes also called a (Spillover OR Social cost) , can have a negative or a positive impact on the third party. An externality occurs when an exchange between a (Buyer and seller OR Population of two cities) has an impact on a third party who (Is not OR is) part of the exchange. For a negative externality, the private costs of an action are (Less or More) than the costs imposed on society as a whole. For a positive externality, the private benefits of an action are (Less or More) than the social benefits. An example of positive externality is (Vccination OR Good wether), whereas an example of negative externality is (Population OR Hurricane)
Externalities can not be positive. That is, there can be a third party cost associated with the production or consumption of a good or service, but there cannot be a benefit. A) True B) False
Consider an infectious disease such as the flu which is spread primarily through virus particles in aerosolized respiratory droplets of already infected people. a In the midst of an infectious disease epidemic of this sort, is it privately rational for people to limit their exposure to other people, perhaps by staying home from work or not going to school? b An infected person who goes out into public areas and does not take precautions to contain their respiratory emissions clearly poses a negative externality on those around them. Does an uninfected person going out into public areas also pose a negative externality? c For a particularly severe disease outbreak of this sort, one possible government response is to exaggerate to the public both the harm that might arise from contracting the disease and the likelihood of contracting the disease. In what ways might such a strategy reduce the harm to the public from the disease epidemic? In what ways might such a strategy increase the…
Back to Assignment Attempts Keep the Highest / 2 9. Private solutions to correct for externalities Consider the following scenario: Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstream into a lake that has become thick with algae and polluted by the minerals in the waste matter. The local office of a nonprofit environmental organization collects enough donations to fund a campaign to stop the farm's pollution. Which of the following types of private solutions to the externality of pollution has occurred in this case? O Charities O Integration of different types of businesses through merger or acquisition O Moral codes and social sanctions O Contracts It's important to note that sometimes private solutions to externalities do not work. For example, this occurs when an excessive amount of time or money must be spent for parties to reach an agreement. This describes the problem of Grade It Now Save & Continue…