Homework (Ch 10)Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the sociallyoptimal quantity.Social CostMarket EquilibriumSocially Optimal LevelPRICE OF AIR HORNS69°FCloudySupply(Private Cost)Demand(Private Value)QUANTITY OF AIR HORNSCI 3°F2. Efficiency in the presence of externalitiesAir horns impose many external costs on society: the risk of being deafened, the annoyance of being awakened in the middle of the night, and so on.Therefore, the market equilibrium quantity of air horns is not equal to the socially optimal quantity. The following graph shows the demand for airhorns (their private value), the supply of air horns (the private cost of producing them), and the social cost of air horns, including both the private costand external costs.Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the sociallyoptimal quantity.Social CostMarket EquilibriumSocially Optimal LeveloudyPRICE OF AIR HORNSSupply(Private Cost)D

The optimal allocation of resources in society, taking into consideration all external and internal…

Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity. (? Social Cost PRICE OF AIR HORNS F oudy Supply (Private Cost) Demand (Private Value) QUANTITY OF AIR HORNS +|+| Market Equilibrium Socially Optimal Level C C

Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity. (? Social Cost PRICE OF AIR HORNS F oudy Supply (Private Cost) Demand (Private Value) QUANTITY OF AIR HORNS +|+| Market Equilibrium Socially Optimal Level C C

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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