The problem of excess pollution mainly occurs because of O asymmetric information. O a negative externality. O a monopoly. O a positive externality.
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O asymmetric information.
O a negative externality.
O a monopoly.
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- 3. The effect of negative externalities on the optimal quantityof consumption Consider the market for pharmaceuticals. Suppose that a pharmaceutical factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing additional pharmaceuticals imposes a constant per-unit external cost of $280. The following graph shows the demand (private value) curve and the supply (private cost) curve for pharmaceuticals. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $280 per unit. PRICE (Dollars per unit of pharmaceuticals) 800 720 640 560 480 400 320 240 160 80 O 1 2 3 □ O O ㅁ 4 Supply (Private Cost) Demand (Private Value) 5 6 7 QUANTITY (Units of pharmaceuticals) Social Cost ? The market equilibrium quantity is units of pharmaceuticals, but the socially optimal quantity of pharmaceuticals production is units. To create an incentive for the firm to produce the socially optimal…The diagram below gives information about demand and supply for robots in Econtand. 14 12 11 10 $ 9 6. 0 12 345 67 8 9 10 Suppose that each robot in Econland creates a S6 positive externality because of how they make neighborhoods safer. If the government imposes the Pigouvian policy (the tax e total surplus as a result of this policy? subsidy that will maximize total surplus), what would be the change in O $9 O +$9 O $18 O no change in total surplus from this policy O +$18 32109876543210- My O 4 Schol 15909/quizzes/855329/take 1. Concepts & Price (5) OX₁ OS OX OD % Refer to Graph 3 below. Which curve represents the marginal private benefit? Graph 3 Help O Pa 5 A XX- 930 .C 40 6 C P 4 & 7 8 lyp MOX 4+ 8 Maket for the product of wwater polluting firm Quantity Chat 144 9 O htt C
- Assume that a state authorizes a local authority which regulates cable TV service in your neighborhood. This authority then grants an exclusive operating franchise to a cable TV company. Cable TV is excludible but non-rival in use. What kind of market failure is this? O A) A positive externality O B) A public good. OCA club good DI A negatiVe externalityBy imposing a tax on the production of electricity equal to the cost of acid rain, the government will cause electric utilities to internalize the externality. As a consequence, the cost of the acid rain will become a OA. social cost borne by the public, and the demand curve for electricity will shift down. OB. social cost borne by the public, and the demand curve for electricity will shift up. C. private cost borne by the utilities, and the supply curve for electricity will shift down. D. private cost borne by the utilities, and the supply curve for electricity will shift up. Question Viewerurco Use the chart below to answer the following question. The Socially Optimal Quantity of Pollution Select one: O a. $83 O b. $250 O c. $500 O d. $167 Marginal social cost, marginal social benefit $500 250 167 0 MSC MSB 83 125 Quantity of pollution The chart above shows the marginal social cost (MSC) and marginal social benefit (MSB) of pollution. Using the information provided in the figure, we can conclude the optimal Pigouvian tax per unit of pollution is:
- Quantity Marginal of Total Cost of Pollution Cost Reduction Reduction 1 20 20 50 30 3 110 60 200 90 5 380 180 6 660 280 Use the cost information from the table for a firm creates pollution. If there is a pollution charge of $45 per unit, how much will the firm reduce its pollution? O 1 4 3.Time left 0:16:1 Suppose that elementary education creates a positive externality. If the government does not subsidize education, then Select one: the equilibrium quantity of education will be less than the socially optimal quantity of O a. education O b. the equilibrium quantity of education is optimal the equilibrium quantity of education will be greater than the socially optimal quantity of education C. Od. the equilibrium quantity of education will be equal to the socially optimal quantity of education Next page page r on this pageA good is nonexcludable if A. when you pay for the good, you are guaranteed to be the sole consumer. cem O B. nobody can be excluded from enjoying the benefits of the good. OC. it is also nonrival. O D. only the government can produce it. O E. when you consume a unit, that means there is no less for someone else. As Ass O Time Remaining: 00:59:46 ed Assignments (6) v
- An externality occurs whenever O private costs plus internal costs equal social costs. private costs diverge from social costs. O private costs are the same as internal costs. O private costs are the same as social costs.Suppose that a firm’s emissions and Marginal Abatement Cost (MAC) data are summarized in thetable below. e MAC 0 200 10 180 20 160 30 140 40 120 50 100 60 80 70 60 80 40 90 20 100 0 a. If the price of a pollution permit is $100, how many permits will the firm need? Explain.b. Suppose that the price of a pollution permit increases to $120, how many permits will thefirm need? Explain.c. With this new price of $120, will the firm’s emissions increase or decrease? By howmuch? Explain.d. Can the firm sell any permits? If so, what is the revenue generated from permit sales?Explain.A positive externality will cause a market to produce Select one: more than is socially desirable. O b. more than the same market would produce in the presence of a negative externality. O c. less than is socially desirable. O d. the socially optimal equilibrium amount. a.
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