The graph illustrates the market for pesticide with no government intervention. When the factories produce pesticide, they also create waste, which they dump into a lake on the outskirts of town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing pesticide (that is, the marginal social cost of producing the pesticide is double the marginal private cost.) What quantity of pesticide is produced if no one owns the lake? If no one owns the lake, the quantity of pesticide produced is tonnes a week. The efficient quantity of pesticide is tonnes a week.

The graph illustrates the market for pesticide with no government intervention. When the factories produce pesticide, they also create waste, which they dump into a lake on the outskirts of town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing pesticide (that is, the marginal social cost of producing the pesticide is double the marginal private cost.) What quantity of pesticide is produced if no one owns the lake? If no one owns the lake, the quantity of pesticide produced is tonnes a week. The efficient quantity of pesticide is tonnes a week.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? If there is an external benefit of $3, what is the efficient quantity? For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the market is perfectly competitive and that "one allowance" lets you…
E2
Use a graph to illustrate the quantity of pollution that would be emitted (a) after a corrective tax has been imposed and (b) after tradable pollution permits have been imposed. Could these two quantities ever be equivalent?
The graph above shows the market for paper. The marginal social cost is higher than the marginal private cost A)since the marginal social cost includes all the costs of production, including the value of the externality B)since the marginal private cost includes all the costs of production, including the value of the externality C)because there is no externality in this market D)because for each level of production the social cost is less than the private cost
The graph shows the unregulated market for electricity. The marginal external cost of the pollution created is equal to the marginal cost With no government action to control pollution, what is the marginal social cost of the electricity generated and the deadweight loss created? Draw a point to show the marginal social cost when production is 750 kilowatts per day. Label it 1. Draw the marginal social cost curve. Label it MSC. Draw a point to show the quantity of electricity produced and the marginal social cost with no pollution control. Label it 2. Draw a shape to show the deadweight loss with no pollution control. Label it. The deadweight loss created by the pollution is is $ >>> Remember that the price given on the yaxis is in cents but you must answer in dollars. 447 40- 36- 32- 26- 244 20 16- 12- C 44 0 Price and cost (cents per kilowatt) S-MC 0 D=MSB 100 200 300 400 500 600 700 800 Quantity demanded (kilowatts per day) >>> Draw only the objects specified in the question. 2
The market for seasonal flu shots is depicted in the graph. As more people receive flu shots, fewer people catch the flu and potentially pass it on to others. Therefore, the chance of catching the flu decreases for everyone, even those who do not purchase a flu shot. This is an example of a positive externality. The graph contains the private demand curve (D1) and the supply curve. D1 does not take into consideration the social benefit of people getting flu shots. Graph the social demand curve by placing the end points of D2 at the correct locations. Then, indicate the dead weight loss to society by placing the DWL triangle in the correct location on the graph. The Market for Flu Vaccinations D2 (marginal soeial benefit) DWL supply D1 (marginal private benefit) Quantity of flu shots Price ($)
This graph depicts an externality in a specific market: PMC represents the private marginal cost curve while SMC represents the social marginal cost curve: Price PMC ΠΟ F D A H /SMC Demand Quantity
What is an externality? Provide an example.
Consider the above graph. Is there an externality present in this market? If so, what kind? No, there is no externality. Yes, a negative externality. Yes, a positive externality.
Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Introduce emission taxes Offer a subsidy to consumers equal to the vertical distance between the marginal private benefit curve and the marginal social benefit curve Implement tradable pollution permits Offer a subsidy equal to the price at the efficient outcome Offer a subsidy to producers equal to the vertical distance between the marginal private benefit curve and marginal social benefit curve
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?
The graph shows the marginal private benefit from a veterinary degree and the marginal cost of obtaining it. The marginal external benefit is $8,000 per veterinary graduate per year. Suppose the government decides to subsidize private veterinary schools. Draw the marginal social benefit curve. Label it MSB. Draw the supply curve when the government provides a subsidy that achieves the efficient number of students. Label it S - MC. Draw an arrow to show the subsidy per student at the efficient number of students. The subsidy that achieves the efficient number of students is $ student. >>> Remember that the quantity given on the y-axis is in thousands of dollars. Oll 70 y Selected: none & 7 O * 8 per 0 * ✓ O 9 40- 32- 24- 16- 8- 0- 0 Price and cost (thousands of dollars) 4 F 10 40 30 Students (thousands per year) >>> Draw only the objects specified in the question. Delete Clear Р 20 +S=MC ? D=MB 50 Next 18 X SU 10