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 $120 per unit and theexternal cost at $40 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area.Price240220200180160140120100806040200MSBMSC6 12 18 24 30 36 42 48 54MPCMPBToolsMSBMSCe b. What are the most desirable price and quantity from society's point of view?Price: $Quantity:c. If government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to producers per unit?Value of subsidy. $[ 40d. If, instead, government wanted to increase the quantity to the amount in (b) above, what subsidy would it need to give to consumersper unit?Value of subsidy: S20024120

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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 $120 per unit and the external cost at $40 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area Price 240 220 200 180 160 140 120 100 80 60 40 20 0 MSB MSC 6 12 18 24 30 36 42 48 54 MPC MPB Tools MSB MSC 0

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 $120 per unit and the external cost at $40 per unit. Plot only the endpoints of the both curves and position those points on the edges of the graphing area Price 240 220 200 180 160 140 120 100 80 60 40 20 0 MSB MSC 6 12 18 24 30 36 42 48 54 MPC MPB Tools MSB MSC 0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Price (dollars per unit) PA P3 P₂ P₁ 0 MSC Figure 16.2.1 MC Q₂ Quantity (units per day) 72) Refer to Figure 16.2.1. The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve. If the market is unregulated, then A) the externality is eliminated. B) the quantity produced is greater than the efficient quantity. C) the quantity produced is less than the efficient quantity. D) the quantity produced is efficient but price is too low. E) the quantity produced is efficient but the price is too high.
• Give four (4) economic activities that generate both positive and negative externalities
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1. True or False d. In the presence of an unpriced negative externality such as roadway congestion, marginal private benefit will be less than marginal social cost. e. The optimal level of roadway congestion is zero. f. The optimal congestion toll on a road would be the difference between marginal benefit and marginal private cost at the optimal level of road usage.
A profit-maximizing firm operating two factories currently emits 10 tons of pollution. Marginal private benefit of each ton emitted at each factory is listed in the table below. If it must reduce pollution by 6 tons, how many tons would it continue to emit from Factory B? Marginal Private Benefit Factory B $14 $12 $9 Factory A $20 Ton $18 $15 $11 $7 3 4 $6 $3
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In a market for chemicals, the demand function is P = 200 – Q. The private marginal cost for the chemicals produ cers is MCP = 50 + Q. Pollution generated during the production process causes external marginal cost for the society equal to MCE = 3Q. 4. (a) What specific tax would resultin a competitive market producing the socially optimal quantity of chemicals? Instead of taxation, whatelse can the government do to make sure that the market will work itself out to achieve the socially optimal output? (b)
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