The following problem consist of two parts. First, a short description of a certain mi- croeconomic situation with assumptions and considerations is presented. Second, two statements are made about the situation. You have to identify whether each statement is true or false and elaborate why you assess each statement the way you do. A factory is situated next to a dormitory for nurses who work night shifts. The factory produces 120 units of humanoid robots a day. The production process is rather noisy, and the nurses often complain that their sleep is disturbed. The following graph depicts the marginal private costs (MPC) and marginal social costs (MSC) of the robot factory production. The robot market is competitive and the market price is £340. Based on this information, which of the following statements are correct? Which are false? Statement 1: At Q = 120, both the factory and the nurses would benefit from the nurses paying a fee less than 120 to the factory to reduce output. Statement 2: The efficient level of output is 0, where there is zero marginal external cost to the nurses.
The following problem consist of two parts. First, a short description of a certain mi- croeconomic situation with assumptions and considerations is presented. Second, two statements are made about the situation. You have to identify whether each statement is true or false and elaborate why you assess each statement the way you do. A factory is situated next to a dormitory for nurses who work night shifts. The factory produces 120 units of humanoid robots a day. The production process is rather noisy, and the nurses often complain that their sleep is disturbed. The following graph depicts the marginal private costs (MPC) and marginal social costs (MSC) of the robot factory production. The robot market is competitive and the market price is £340. Based on this information, which of the following statements are correct? Which are false? Statement 1: At Q = 120, both the factory and the nurses would benefit from the nurses paying a fee less than 120 to the factory to reduce output. Statement 2: The efficient level of output is 0, where there is zero marginal external cost to the nurses.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The following problem consist of two parts. First, a short description of a certain mi-
croeconomic situation with assumptions and considerations is presented. Second, two
statements are made about the situation. You have to identify whether each statement
is true or false and elaborate why you assess each statement the way you do.
A factory is situated next to a dormitory for nurses who work night shifts. The factory
produces 120 units of humanoid robots a day. The production process is rather noisy,
and the nurses often complain that their sleep is disturbed. The following graph
depicts the marginal private costs (MPC) and marginal social costs (MSC) of the
robot factory production. The robot market is competitive and the market price
is £340. Based on this information, which of the following statements are correct?
Which are false?
Statement 1: At Q = 120, both the factory and the nurses would benefit from the
nurses paying a fee less than 120 to the factory to reduce output.
Statement 2: The efficient level of output is 0, where there is zero marginal external
cost to the nurses.
600
MSC
500
460
400
MPC
300
p- 340
260
200
100
10
20
30
40
50
60
70
80
90 100 110 120 130 140
Output, Q
(s) sısoɔ
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