Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per ton. PRICE (Dollars per ton of bolts) 700 630 560 490 420 350 280 210 140 70 0 0 ☐ 1 O O ☐ 2 O 3 4 5 QUANTITY (Tons of bolts) ☐ Supply 6 (Private Cost) Demand (Private Value) 7 Social Cost ? The market equilibrium quantity is 4.5 tons of bolts, but the socially optimal quantity of bolt production is 3 To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts. tons. of $ per ton

Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per ton. PRICE (Dollars per ton of bolts) 700 630 560 490 420 350 280 210 140 70 0 0 ☐ 1 O O ☐ 2 O 3 4 5 QUANTITY (Tons of bolts) ☐ Supply 6 (Private Cost) Demand (Private Value) 7 Social Cost ? The market equilibrium quantity is 4.5 tons of bolts, but the socially optimal quantity of bolt production is 3 To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts. tons. of $ per ton

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Mr permise states I do not understand why anyone would suggest the use of taxes or regulations in pollution problems. Taxes are unfair and regulations are costly and inefficient. The best approach is to trust the market. Firms will control their emissons because it is cost effective for them to do so. The only policy they may need to applied is the use of market permits. Thismarket would function completely and permit prices would clearly represent all revlevant costs Discuss this statement
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Figure above shows the Marginal Benefit to a village from harvesting forest land, as well as the Marginal Costs to a nearby City from the harvest. Assuming the Village controls the forest. Without any negotiation between the village and the City, how many acres will be harvested?
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