Use the following supply and demand graph to answer the question below.S₁S₂PriceJE0A B сQuantityD₂-D₁S₁ and D₁ represent the current market supply and demand, respectively. S2 and D2 represent the socially optimal supply and demand. The positions ofthe graphs indicate that there is (are) externalMultiple Choicecosts from production and consumption of the product.costs from production and external benefits from consumption of the product.

Externalities are important in economics because they indicate the unintended implications of one's…

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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The table below shows cost data for producing different amounts of oil. The market for oil produces negative externalities in the form of pollution and environmental damage. ITTT Price Demand Private Supply Private+Social Supply 4 55 40 10 12 50 50 20 20 45 60 30 28 40 70 40 36 35 80 50 How many barrels of oil will be produced by the free market? What is the socially optimal output of oil?
Price, Cost P4 Ps P₂ P₁ Q₂ Q₁ Quantity Refer to figure above. If a negative externality exists, then the external costs associated with the negative externality equal the distance between points and the socially optimal output is D and B; Q1 B and D; Q2 A and B; Q2 Cand B; Q2
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…
3Q2Q3: Both questions correlate with each other. Use the following to complete the graph.
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.
A local school administrator observes an increase in the number of flu cases in the public schools over the last two years. She is concerned that some families cannot afford flu vaccine and are therefore not having children vaccinated. She is also concerned that the failure to vaccinate some children is putting other children at risk, so she proposes that the state subsidize vaccines to increase coverage rates. a. Determine whether the failure to vaccinate some children is an external benefit or an external cost. If an external cost is present, move point A and point B to show the marginal social cost curve. If an external benefit is present, move point A and point B to show the marginal social benefit curve. Place point C at the equilibrium outcome. Place point D at the socially optimal outcome. Flu vaccines A B D Supply (marginal private cost) Price
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?
Address the question in the image.
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
Assume that to balance the benefits of providing electricity with its pollution costs, A. Treehugger recommends that the government imposes a tax $0.04 for every kilowatt hour (kWh) of electricity sold. If they do, how much of this tax is actually paid by the customer (consumer’s burden) and how much is paid by the firm (producer’s burden)?
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?

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