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- 1. Two interesting public goods are radio and television signals. A. In the U.S., private markets have provided these public goods because a private good is associated with radio and television signals: advertising. Revenue from advertising makes it possible for private firms to provide the public goods-radio and television broadcasts. Explain why these are public goods.K7 Fully explain1
- Suppose electricity generates a negative externality in production If so, then A. the marginal social cost of electricity is less than the marginal private cost . B. the marginal social cost of electricity equals the marginal private cost . C. the marginal social benefit of electricity is less than the marginal private benefit . D. the marginal social cost of electricity equals the marginal social benefit. E. the marginal social cost of electricity is greater than the marginal private cost.A private good which creates no externalities is _____________________ by a free competitive market. A. Underprovided B. Overprovided C. Optimally provided3. The effect of negative externalities on the optimal quantityof consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant external cost of $385 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for paper. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $385 per ton. PRICE (Dollars per ton of paper) 1100 990 880 770 660 550 440 330 220 110 0 0 ☐ 1 ☐ 2 3 4 5 QUANTITY (Tons of paper) O n Supply 8 (Private Cost) Demand (Private Value) 7 Social Cost (?) The market equilibrium quantity is tons of paper, but the socially optimal quantity of paper production is To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a of paper. tons. of $ per ton
- 3. The effect of negative externalities on the optimal quantityof consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant external cost of $450 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for paper. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $450 per ton, 1500 PRICE (Dollars per ton of paper) 1350 1200 1050 900 750 600 450 300 150 0 D O QUANTITY (Tons of paper) Supply (Private Cost) The market equilibrium quantity is Demand (Private Value) Social Cost tons of paper, but the socially optimal quantity of paper production is To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a of paper. tons. per ton91. Production of widgets results in emissions of a harmful pollutant, at a rate of 1 ton of pollution per widget produced. The marginal cost of producing widgets is $4 per widget. The demand curve for widgets is 9 - Q, where Q is the quantity of widgets. The widget market is competitive, such that both consumers and producers are price takers. The government is considering policies to address this negative externality. a. The first policy being considered is a technology standard. The abatement techonol- ogy being required costs $2 per widget. What is the social cost of this policy? b. The marginal damages of the pollutant are constant and valued at $1 per ton. What are the social benefits of the technology standard? c. Would the technology standard represent an improvement in economic efficiency for society? Why or why not? d. Now assume that the policy maker imposes a Pigouvian tax on the emissions of the pollutant. What are the social benefits of this policy? e. What are the net…
- How to set the Pigouvian Taxes to correct the problem with negative externalities? Eliminate the divergence between ... Mark all that applies. Group of answer choices the marginal social cost and marginal private cost at the socially optimal level of consumption. the polluter’s private benefit and social benefit. the average social cost and average private costs. input costs and output prices at the market equilibrium. the marginal social cost and marginal private cost at the market equilibrium.Give proper exact answer to every part step by step and take a like2. Efficiency in the presence of externalities Vaping imposes many external costs on society secondhand smoke, the adverse health burdens imposed on society, and so on. Therefore, the market equilibrium quiantity of vapes does not equal the socially optimal quantity. The following graph plots the demand for vapes (their private value), the supply of vapes (the private cost of producing them), and the social cost of vapes, including both the private cost and external costs. Use the block point (plus symbol) to indicate the market equilibrium quaneity Next, use the purple point (diamond symbol) to indicate the socially opamal quantity ? PRICE OF VAPES Demand (Private Value) QUANTITY OF VAPES Social Cost Supply (Private Cost) + Market Equilibrium Socially Optimal Level
