The graph illustrates the unregulated market for uranium. When the mines produce uranium, they also create waste which they dump into a river that runs through a small town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing uranium (that is, the marginal social cost of producing the uranium is double the marginal private cost). If no one owns the river and the government levies a pollution tax, what is the tax per ton of uranium that achieves the efficient outcome? CIB Draw a point to show marginal social cost if production is 240 tons. Draw the MSC curve and label it. Draw an arrow at the efficient quantity that shows the marginal external cost. The tax per ton of uranium that achieves the efficient outcome is $ 2160 1920- 1680- 1440 1200- 960- Price and cost (dollars per ton) 720- 480- 240- 04 0 60 120 180 Quantity (tons per week) >>> Draw only the objects specified in the question. 240 S D 300

The graph illustrates the unregulated market for uranium. When the mines produce uranium, they also create waste which they dump into a river that runs through a small town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing uranium (that is, the marginal social cost of producing the uranium is double the marginal private cost). If no one owns the river and the government levies a pollution tax, what is the tax per ton of uranium that achieves the efficient outcome? CIB Draw a point to show marginal social cost if production is 240 tons. Draw the MSC curve and label it. Draw an arrow at the efficient quantity that shows the marginal external cost. The tax per ton of uranium that achieves the efficient outcome is $ 2160 1920- 1680- 1440 1200- 960- Price and cost (dollars per ton) 720- 480- 240- 04 0 60 120 180 Quantity (tons per week) >>> Draw only the objects specified in the question. 240 S D 300

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
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
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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
The primary source of air pollution in the small town of Smokey, Nevada is a nearby steel mill. The local environmental agency has decided that the mill needs to reduce its emissions because the town's population is located directly downwind from it. Currently the agency is considering three different approaches to reducing pollution from the mill: a technology standard, an emission standard and an emission tax. Why might the owner of the mill prefer an emission standard to a technology standard that would produce the same level of emissions? a Because with emission standards the polluter is more flexible in selecting the technology that will minimize her abatement cost Ob. Because polluters usually try to stick to their existing technology O C. Because it has been proven to be easier to implement O d. Because polluters, as all producers are suspicious about new technologies
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Consider the market for steel. Suppose that a steel manufacturing plant dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the plant. Producing an additional ton of steel imposes a constant external cost of $165 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for steel. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $165 per ton. 1100 990 Social Cost 880 770 Supply (Private Cost) 660 550 440 330 220 Demand 110 (Private Value) 1 2 4 7 QUANTITY (Tons of steel) PRICE (Dollars per ton of steel)
Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant marginal external cost (MEC) of $75 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for bolts. Use the purple points (diamond symbol) to plot the marginal social costs (MS) curve when the marginal external cost is $75 per ton.
The graph shows the unregulated market for electricity. Suppose that at every quantity produced, the marginal external cost of electricity equals the marginal private cost of production. To show the market outcome, draw the following four items on the graph: 1. Draw a point to show the marginal social cost when the utility produces 500 kilowatts per day. Label it 1. 2. Draw the marginal social cost curve. Label it MSC . 3. Draw a point to show the electricity produced and its marginal social cost. Label it 2. 4. Draw a shape to show the deadweight loss created. Label it DWL . >>> Draw only the objects specified in the question.
This is an end-of-chapter problem that I'm struggling with! thanks!
Differentiate between private goods, public goods, common resources, and externalities
Air pollution creates a negative externality—a cost suffered by a third party as a result of an economic transaction. A standard solution to a negative externality is a Pigouvian tax, a tax that raises the marginal private cost of pollution emissions to the level of the marginal social cost. The socially optimal quantity of pollution emissions is then determined by the intersection of the marginal private benefit, or demand, curve and the marginal social cost curve. The article notes that "putting a dollar value on the benefits of cleaner air has been difficult." Assuming this problem has been resolved, in the accompanying diagram, move the endpoints of line Smarginal social cost to show the marginal social cost curve. Then move the line labeled "Tax" to show the amount of the tax needed to limit emissions to the socially optimal level.