Use the following supply and demand graph for product X to answer the question below.PriceXQ₁Quantity of Product XIf there are positive externalities from the consumption of product X, then the socially optimal demand curve would beMultiple Choiceto the left of line D on the graph.an upward-sloping line.< Prev38 of 45*********Next > Multiple ChoiceOOto the left of line D on the graph.an upward-sloping line.to the right of line D on the graph.at the position of line D on the graph.

Externality is the External cost or benefit borne by the third party. There is positive externality…

Answered: Use the following supply and demand…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Only typed answer You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 3Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 14Q. Instruction: Round your answers to the nearest two decimal places. a. What is the socially efficient level of output? units b. Given these costs and market demand, how much output would a competitive industry produce? units c. Given these costs and market demand, how much output would a monopolist produce? units d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output. Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit. Pollution taxes…
The equations below represent the demand and supply curves for annual gym memberships in a city. qD= 500 − 2p, qS=0.5p − 50 Because physical activity leads to better health, the city estimates that each annual gym membership saves $30 of public spending on healthcare per year (a positive externality). a. In a graph, show the market and the socially optimal equilibria for annual gym memberships in this city. Does the market equilibrium result in under- or over-consumption of memberships? What is the deadweight loss associated with the market failure in this situation? b. Would you recommend this city to implement a subsidy (a negative Pigouvian tax) to correct this market failure? If so, how much would be the subsidy per unit? What would be the effects of your proposed policy on the quantity, price, and aggregate welfare?
Why is it socially efficient to set marginal benefits equal to marginal costs rather than abating until total benefits equal total costs?
Suppose that speeding imposes externalities on other people resulting in a social cost of $50. A town is considering hiring an extra police officer to give out speeding tickets. If we want to maximize social welfare (absent enforcement costs), which of the following statements are true? (Assume risk neutral drivers.) What happens to the socially optimal cost of the speeding ticket if the town decides to hire the police officer? a) It goes down b) It goes up c) The amount that it goes down depends on salary of the police officer d) The amount if goes up depends on the salary of the police officer e) None of the above
1. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a v externality. The following graph shows the demand and supply curves for a good with this typé of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good.
Are socially efficient level of emission and market efficiency is equal? Explain with help of diagram?
using an appropriate graph, show the effects of externalities on the private and social optimum prices and quantities. discuss briefly how could social optimum levels be achieved
The figure below shows supply and demand for planting trees, based on private costs and benefits. Trees sequester carbon, meaning that they help counteract pollutants that contribute to climate change. Price of trees (S) 22114 20 18 16 12 10 8 6 4 2 0 MCpvt D-MBMB, 10 20 30 40 50 60 70 80 90 100 Quantity of trees Tools Social Cost DWL
There are two people. Each person's demand for a public good is P = 20 - Q. The marginal cost of providing the public good is given by MC2 = $12 (MC is not $24). The above graph summarizes the relevant information. The total demand for the two workers shown above is the vertical sum of the demand curve for each worker.(a) What is the socially efficient quantity of the public good?(b) How much will each person have to pay per unit to provide the socially efficient quantity?(c) What is the consumer surplus for each person based on the quantity determined in (a) and the price determined in (b)?(d) Given that this is a public good, if either one of the two people does not pay the price you have stated in (b), can they be prevented from consuming the good?

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