The graph below illustrates a market for cigarettes.Price ofcigarettes$10$8$711Marginalsocial costMarginalprivate cost120180DemandQuantity of cigarettes(millions of packs)A. Does the graph suggest that there are positive or negative externalities associated withcigarettes?B. Find the equilibrium price and quantity.C. What is the socially optimal quantity?D. According to the graph, what is the marginal external cost of a pack of cigarettes?

A. ExternalitiesThe graph indicates that smoking cigarettes has unfavorable externalities. The…

Answered: The graph below illustrates a market…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 1WNG

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Similar questions

Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
Give an example of a positive externality and an example of a negative externality.
The following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. Which quantity is socially optimal (i.e. what is the efficient quantity)? What is the deadweight loss generated by the externality?
why do externalities make market outcomes inefficient?
Use the table below to answer the questions: A. Find the equilibrium price, assuming sellers ignore negative externalities. B. Find the equilibrium quantity, assuming sellers ignore negative externalities. C. Find the optimal price, including external costs. Find the optimal quantity, including external costs.
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What is the private cost of the last unit produced and traded (or the private cost to the marginal seller) in the market?
From CNN what news article represents an issue ragards to Externalities or that can be realted to externalities? Cite at least one source (News Article, Video, etc.) for any data. Explain: What is the Economic issue? (Describe the issue) What is the connection to Externalities? (positive, negative, policy) (Use Math, Graph or data to explain or support your idea) Explain how this affects the Economy (individual, industry, national or global)
Macmillan Learning Pollution from bright city lights makes it nearly impossible to stargaze within a city setting. The supply and demand for electricity used in city lighting are shown in the graph. Suppose the marginal external cost for an additional kilowatt- hour (kWh) of electricity is 5 cents. Drag the endpoints of the blue line to draw in the marginal social cost (MSC) curve for electricity. Place the black dot at the point corresponding to the socially optimal quantity and price for electricity. Assume the government places an optimal Pigouvian tax on electricity used at night to reduce light pollution so that people can enjoy the stars. As a result of the Pigouvian tax, consumers pay a lower price for electricity and producers increase output. consumers pay a lower price for electricity and producers lower output. consumers pay a higher price for electricity and producers lower output. consumers pay a higher price for electricity at night and producers increase output. Price,…
DRAW THE POSITIVE EXTERNALITY CURVE AND EXPLAIN-

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