The figure below shows the market for a chemical, of which the productioncauses certain negative externalities in the form of pollution. Define MCP =marginal private cost, MCS = marginal social cost, D = market demand, P =price, and Q = quantity.410(a)(b)(c)(d)100PMC,MLDIf the market is competitive, what is the equilibrium price and quantity?Is this equilibrium outcome socially optimal?In terms of the areas denoted by A, B, and C, what is the deadweightloss to society if the market is competitive?What can the government do to achieve the socially optimal level ofpollution?

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Answered: The figure below shows the market for a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.
Suppose that at market equilibrium, the marginal private cost is $29 and the marginal social cost is $52. What is the value of the external cost to society?
5B. Two textile mills, located across a river from each other, are polluting the river. The marginal costs of pollution reduction for each firm are MCE₁ = 4E₁ + 4 MCE2 = 4/3E2 + 4/3, where E is the reduction in pollution from unregulated levels. The associated marginal social benefit is estimated to be MSB = 10-E, where E = E₁ + E₂. a. What is the socially optimal level of water-pollution reduction? c. If instead the government imposed a standard requiring each firm to equally reduce the level of pollution to achieve the socially optimal solution in part (i), what are the costs for each firm?
Consider a manufactured good whose production process generates pollution. The demand for the product is Q=100-3P. The market supply function is Q=P. The marginal external cost is MEC=2Q. What is the emissions tax that needs to be imposed to achieve the social optimum? Illustrate on graph What is the economic incidence of this emissions tax? In other words, what proportion of this tax will be paid by producers of this product and what proportion of the tax will be paid by consumers?
Externalities: Suppose the daily inverse demand curve for gasoline in Portland is given by P = $100 – Q, the MC = 1.5Q, and the EMC = 1.5Q. Q is measured in thousands of gallons of gasoline per day. a. Graph the demand, marginal cost, and external marginal cost functions. b. How many gallons will be consumed per day if gasoline consumers do not consider the EMC of gasoline? c. How many gallons of gasoline will be consumed per day if gasoline consumers consider the EMC.
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
P = 16-.25Q MC = 2 + .25Q Production creates an external benefit equal to $2 per unit. What is the socially optimal level of output? 10 24 28 32
Please answer precisely and clearly. thank you.
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 above
using an appropriate graph, show the effects of externalities on the private and social optimum prices and quantities. discuss briefly how could social optimum levels be achieved
Supply curves for the production of oil in Sanaton are shown in the diagram below. Supply based on both private and private+social costs is shown. Answer the following questions based on the diagram. Supply (Private + Social) Supply (Private) VE (16000 $70 (22000,$59) Demand Price Quantity What is the equilibrium quantity when negative externalities of producing oil are not taken into account? What is the equilibrium price when negative externalities are not taken into account?
Suppose golden retrievers create positive externalities because they are cute and people like seeing them at the park. Which of the following is true? A) The social supply curve is to the left of the private supply curve. B) The social supply curve is to the right of the private supply curve. C) The social demand curve is to the left of the private demand curve. D) The social demand curve is to the right of the private demand curve.

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