The graph below illustrates the private costs and benefits of producing Trisenian, a new miracle drug. a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $90 per unit and the external cost at $30 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area... Price 180 165 150 135 120 105 90 75 60 45 30 15 0 20:25 20 25 40 45 50 MPC MPB Tools MSB MSC

The graph below illustrates the private costs and benefits of producing Trisenian, a new miracle drug. a. Draw the MSB and MSC curves on the graph below, assuming that the external benefits are estimated at $90 per unit and the external cost at $30 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area... Price 180 165 150 135 120 105 90 75 60 45 30 15 0 20:25 20 25 40 45 50 MPC MPB Tools MSB MSC

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An underground aquifer in a developing country is available to all farms in a small community. It costs 50 dollars per farm per day to operate a pump that can extract groundwater from the aquifer. The value that a farm can obtain by using or selling the water depends on how many farms extract water. Assuming there is no regulation of the aquifer, how many farms will extract groundwater? $160 $140 $120 $100 500 500 $40 1:20 50 2 3 6 Number of Farms Extracting Groundwater . Marginal Social Cost Marginal Private Cost Marginal Private Benefit 10 Number of Farms Marginal Private Marginal Social Marginal Private Extracting Water 1 2 3 4 5 6 7 8 9 10 Benefit 100 100 100 90 80 70 60 50 40 30 Cost 50 50 50 90 100 110 120 130 140 150 Cost 50 50 UN 50 50 50 50 50 50 50 50
L. All of the following are ways to cope with negative externalities except public choice obligatory controls pollution taxes Creating new property forms Private negotiations according to the Coase theorem
19:36 ! 13:41 3.00 KB/S 015 The market below depicts supply, demand and marginal social cost in the widget market. 0.00 0.00 0.70 0.00 050 0.40 020 50 100 125 150 175 2001 To correct for the externality, what should be used? Oa. A subsidy of $0.20 b. A tax of $0.20 Oc. A subsidy of $0.30 Od. A tax of $0.30 =
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for electric cars. Suppose that a electric car manufacturing facility dumps sludge into a nearby river, creating a negative externality for those living downstream from the facility. Producing additional electric cars imposes a constant per-unit external cost of $600. The following graph shows the demand (private value) curve and the supply (private cost) curve for electric cars. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $600 per unit. PRICE (Dollars per unit of electric cars) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 0 + 1 O □ ☐ O 2 3 4 5 QUANTITY (Units of electric cars) The market equilibrium quantity is ☐ Supply (Private Cost) 6 Demand (Private Value) 7 Social Cost (?) units of electric cars, but the socially optimal quantity of electric car production is To create an incentive for the firm to produce the socially optimal…
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The figure below shows the market for a chemical, of which the production causes 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. 4 10 (a) (b) (c) (d) 100 P MC, ML D If 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 deadweight loss to society if the market is competitive? What can the government do to achieve the socially optimal level of pollution?
There are three major ferry lines operating in Vancouver, each generating 100 units of pollution per year. The ferry lines face the costs of reducing pollution that are shown in the table below. Ferry line Cost of reducing pollution by 1 unit A $1,200 B $2,400 C $1,600 a. The BC government has decided it wants to reduce pollution levels by 50 percent and requires each ferry line to cut its pollution in half. Determine the cost of pollution reduction for each ferry line.Instructions: Round your answers to the nearest dollar. Ferry line Cost of pollution reduction A $ B $ C $ a. The total cost of pollution reduction is $ .b. Suppose the government decides to give each ferry line 50 tradable permits. Each permit allows a ferry line to produce one unit of pollution. Ferry line ____ will buy permits from ferry line ____.c. Under this system of tradable permits, the total cost of pollution reduction is $ .
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2) Suppose the demand curve for a rubber-based product is Q_D=225-0.5P, and the supply curve is Q_S=0.5P-15. If the external cost of the suit from the waste produced by the factory producing the item is MEC-Q, calculate: (a) Competitive price and quantity when there is no control over the waste disposal of the factory. (b) Price and quantity at the socially optimal level.
Sh 13 Subject - economics
Figure 17.2) Suppose the external marginal cost is constant at $5 per unit. Price (demand) equals social marginal cost at output level: Select one: a. 7 b. 3 c. 6 d. 4 Price (S) 14 12 10 00 8 6 4 2 -N G 8 o 10 S = MC 12 14 Quantity