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- 4: A Profit-Maximizing Monopoly Firm Price, marginal revenue, marginal cost, average total cost $35 29 ATC MC 15 8. 5. MR 160 220 250 Quantity of output (per week) (See Figure 4) The profit-maximizing monopoly firm's profit per unit is: O $10 O $20 $5 O $14The dry-cleaning industry is a major source of air pollution. Based on this information, which conclusion is the most likely to be true about the price and output of dry-cleaning services? O Because dry-cleaning does not have much demand, pollution is not affecting their demand. O Dry-cleaning is a complimentary good. O Dry-cleaners see it as less profitable to cause pollution. Because there are no financial consequences for the pollution, fixing it wouldn't be as profitable for dry-cleaners.PRICE (Dollars per unit of electricity) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 0 O E 1 O ☐ O ☐ 3 ■ The market equilibrium quantity is O 2 4 5 QUANTITY (Units of electricity) ☐ 0 Supply 6 (Private Cost) Demand (Private Value) 7 Social Cost (?) units of electricity, but the socially optimal quantity of electricity production is To create an incentive for the firm to produce the socially optimal quantity of electricity, the government could impose a unit of electricity. units. of $ per
- 0 Figure 4 PRICE (Dollars per unit) 9.00 8.40 6.21 4.50 Social Cost Supply 48 60 76 100 QUANTITY (Units of tobacco) O $6.21 and 76 units, respectively. O $9.00 and 60 units, respectively. O $8.40 and 48 units, respectively. O $4.50 and 100 units, respectively. Demand Refer to Figure 4. This graph represents the tobacco industry. The socially optimal price and quantity are1. For purposes of this question, note that pecuniary externalities are not typically considered to be a standard externality. The global supply of a popular chili sauce is largely or exclusively manufactured by one factory in California. a. Suppose that when this factory opened, it purchased a large tract of land and then began buying inputs like machines and peppers from nearby firms. Further suppose these purchases caused nearby land and housing values to increase, squeezing nearby renters. Is that increase an externality the way it is usually defined? In 1-2 sentences, why or why not? b. Production of this chili sauce uses large quantities of peppers, and suppose the factory installs a new ventilation system that emits particles from pepper processing to the neighborhood, causing neighbors’ eyes and throats to suffer, and then nearby home values fall. Is that decrease in home values an externality the way it is usually defined? In one sentence, why or why not?Adam Smith proposed taxing ‘Sugar, rum and tobacco’ because they are: “nowhere necessaries of life” “objects of almost universal consumption” Why do you think Adam Smith preferred to impose a tax on luxury goods? Why do you think Adam Smith preferred a tax on ‘objects of almost universal consumption’? Note that ‘Smith’s proposal to tax sugar was not aimed at improving health’ Requirement: Demonstrate a precise understanding of Adam Smith’s meaning and intent, with the appropriate link to relevant economic concepts.
- the por. O Tue O FateA natural monopoly exists when O producing a large output has significantly lower marginal cost than producing a small output. the good produced by a monopoly is classified as a natural product. exploitative business tactics are used to force other companies out of the market illegally. O the monopoly-level of market power develops naturally due to the company's high product quality.what kind of externality is produced in the market illustratef in the diagram below?
- F Select v Paragraph Styles Editing 91 10 L 11 1 12 1- 13I · 14 I 15. 16 I 17 1 18 Ser 1.1 4 51. 6 7 81 19 1 Question 8 Read the following scenario and answer the succeeding questions. Scenario 61 A young entrepreneur from Belville, identified a gap in the market for selling quality firewood. The best wood, according to the entrepreneur, is from the Northern Cape. The entrepreneur located a supplier willing to sell a bag of firewood for R28.00. To transport the wood to Belville, the entrepreneur hired a transportation truck that can accommodate 1 200 bags per trip from the Northern Cape to Belville. The transportation cost per bag is priced at R3 and the labour employed to unload the truck at R7.50 per bag. The entrepreneur will set the selling price at R70.00 per bag. For scenario 6, answer the following questions: 8.1 Calculate the total cost per bag of wood 8.2 If the entrepreneur sells 1 200 bags of wood at R70.00 per bag, what will the revenue for the entrepreneur be? 8.3 If the…11. Compared to a good with no externalities, a good with a negative externality will appear to have experienced a OIncrease in Supply ODecrease in Supply Olncrease in Demand ODecrease in Demand at each corresponding price...9