The diagram to the right depicts the market for cough medicine in a small town. The quantity of cough medicine ismeasured in bottles sold per week; price is measured in dollars. The townspeople are happier and healthier becausepeople who have colds and flus buy and take the medicine and reduce the spread of infection. What is the sociallyoptimal number and price of cough medicine?$28-$24-.....The socially optimal equilibrium occurs at a quantity ofbottle(s) and a price of $$20-$16-S$12-$11$10$8-$4-DAQ16: 20$0-10203040

In a market, when an activity has a positive impact on society, it will increase social marginal…

Answered: The diagram to the right depicts the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the equilibrium quantity of a good is also the socially optimal quantity, then: Multiple Choice the marginal benefit to consumers of another unit of the good is zero. the marginal cost to producers of another unit of the good is zero. total economic surplus has been maximized. it's possible to make at least one person better off without hurting anyone else.
Which of the following statements is correct? a.) Economic analyses can often do a reasonable job of evaluating the net benefits from some re-allocation of environmental resources. Policymakers should thus feel comfortable in choosing among alternative policies according to whichever one yields the highest net benefits. b.)Basic benefit-cost analysis, as typically practiced in the U.S., assumes that the marginal value of an extra dollar of net benefits is the same for everyone. c.)All socially optimal allocations are efficient, but the reverse is not true. d.)There is always a tradeoff between efficiency and equity. A reallocation of environmental resources that improves efficiency cannot also improve equity, and vice versa.
A local government is considering building new public hiking trails in town.Suppose that the trails are public goods. There are two types of people in a smalltown economy, 1000 avid hikers and 1000 non-hikers, who have typical individualmarginal benefit curves: MB_H = 350 − 5Q and MB_N = 240 − 6Q for the hikersand the non-hikers respectively, where Q is the miles of trails. On the same graph,draw the marginal benefit curves for each type of person and MB of the overalleconomy. If the marginal cost providing this public good is $27000 per mile whatis the optimal level of the public good?
19)Which of the following best illustrates the ceteris paribus assumption? * a)If the law requires people to wear seatbelts in order to reduce fatality rates, it may also cause people to drive faster. b)Chris notices that when economists discuss policy, they use the word "should" quite a lot, and they tend to disagree c)Felicia argues that since her company makes less profit when it limits its toxic pollution emissions, it must be true that pollution regulations are bad for everyone d)Caitlin notices that all other things being equal, her grades are higher the more time she spends studying
Consider Ron’s demand for after school care for his children. The marginal benefit Ron receives for every hour of childcare is provided in the accompanying table. After school childcare(hours per day) Marginal benefit($ per hour) 1 $32 2 $30 3 $20 4 $14 a. If an hour of childcare costs $24, how many hours will Ron purchase each day? Assume Ron can only purchase care in one-hour increments (no partial hours). b. If an hour of childcare costs $18, how many hours will Ron purchase each day? Assume Ron can only purchase care in one-hour increments (no partial hours).
(Figure: Market 5) Use the graph to answer the question. Price Supply $12 $10 $8 $6 $4 | Marginal social benefit $2 Demand 2 6 8 10 12 Quantity The graph shows the marginal social benefit, demand, and supply curves in the toothbrush market. Market forces would yield a quantity of whereas the socially optimal quantity is four; six four; eight six; four O eight; four %24
Mitchell and Scott can produce either apples or oranges. The table lists the maximum number of each that they can produce per day. Apples Oranges Mitchell 6 30 Scott 12 24 Which of the following combinations of goods is it possible for Mitchell and Scott to consume if they can trade apples and oranges on the world market at a price of $6/kg for apples and $1/kg for oranges? 15kg of apples and 18kg of oranges 15kg of apples and 20kg of oranges 10kg of apples and 50kg of oranges Okg of apples and 108kg of oranges
Suppose there are two consumers A and B, and two goods x and y. A's utility function has the following form UA = XA - (XB)1. Which of the following is true? Consumer A's consumption of good x exhibits a negative externality. Consumer A's consumption of good x exhibits a positive externality. Consumer B's consumption of good x exhibits a negative externality. Consumer B's consumption of good x exhibits a positive externality.
Consider the model of a rational consumer that cares about consumption of private goods and consumption of broadcast public television (a public good). Suppose that the total level of broadcast public television provided through voluntary contributions is 10 hours of programming. Then the government decides to raise money through a tax and provide 10 hours of programming to the public. What would we predict about crowd-out of voluntary contributions to broadcast public television when government does this? How would the answer change if consumers get warm glow utility from donating to broadcast public television in addition to utility from the public television itself? (Be specific.)
How Bergson-Samuelson Social Welfare Function used in a model that considers a society's desire for both Pareto optimality and fairness, Mention all necessary assumptions and specify the conditions that ensure a general equilibrium and social welfare
According to economists, the process of optimal decision making by consumers typically yields total benefits well above the amount paid for the goods. These market-created benefits are referred to as ▼, and using the graph to the right, are represented by area Suppose now that the market price falls. According to the graph, the excess of total benefits over the total amount spent by consumers will ▼ decrease increase not change PM B Quantity (Q) Q

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