11.04Unanswered • 2 attempts leftWhen a corrective tax is created so that it equalsthe external costs linked to the production of aproduct, it willand the market result becomesthe price buyers payefficient.Adecrease; moreBdecrease; lessCincrease; moreDincrease; less

A corrective tax is an instrument used by the government to address market failure. Taxes increase…

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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 marginal social cost of producing a good or service is the A) cost of producing an additional unit borne by people other than the producer. B) sum of the marginal private cost and the marginal external cost minus the marginal social benefit. C) sum of the marginal private cost and the marginal external cost. D) same as marginal external cost. E) cost of producing an additional unit borne by the producer.
QUESTION 3 Use the figure below to answer the following questions: Price and cost (dollars per tonne of paper) MSC 15 MC 14 13 12 11 D= MSB 30 40 50 60 70 Quantity of paper (tonnes) a. What is the price and quantity in the unregulated equilibrium in the paper market? b. A tax of per tonne is necessary to achieve the efficient output of tonnes of paper. c. What is the marginal external cost or benefit?
Policy making to remedy market failure requires the government to estimate values such as marginal private costs, marginal private benefits, marginal external costs and marginal external benefits. Indicate which of these values must be estimated correctly in order to allocate resources efficiently using each of the following approaches. a.) Taxes used to correct for a negative externality b.) Subsidies used to correct for a positive externality c.) A government provision of public goods that does not cause externalities d.) Limits on the quantity of a private good that causes negative externalities
1+ 2A The government sets a standard of 10 abatement and charges a pollution tax of $9 for unmet Assume a firm has MAC = abatement. How much tax revenue does the firm pay? 9 4 90 36 54
Suppose the external marginal cost of producing steel is 2Q while the internal marginal cost is 9Q. The inverse demand for steel is P = 120 – Q, what is the socially efficient level of output? Assume that the firm is part of a purely competitive industry A. optimal output is 10 B. optimal output is 9 C. optimal output is 8 D. optimal output is 7 E. no correct answer
Question 11 In any Pigouvian taxation, the tax on the producer (that causes negative production externalities) must equal: Group of answer choices a. the demand curve b. the marginal damage c. the private marginal cost d. the social marginal cost
how corrective taxes solve the problem of negative externalities, show with a graph Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
• Draw a correctly labeled graph showing a market with a positive externality. Label Demand, MPB, MSB, Supply, MPC, MSC, the market quantity (Qmkt), and the efficient quantity (Qopt)
P ($) 10 9 8 7 6 5 4 3 2 1 0 0 1 2 3 4 5 6 7 8 9 10 X The graph above shows a market with an externality. Refer to the graph to answer the following questions: In this market the externality is positive If the government does not interfere in the functioning of this market, the quantity traded in the market is One way for the government to move the market to the efficient point is to implement a corrective Check per unit. As a result of this intervention, the quantity traded would increase + and the price is $ + in the amount of $ subsidy tax and the price of the good would decrease stay the same increase +
Oc
The private marginal benefit of a product's consumption is PMB = 200 - 2Q, and the private marginal cost of its production is PMC = 2Q. The production causes a negative externality, and the government imposes a $400 tax in an effort to internalize the externality. What is the marginal external damage of this good's production? $50 $100 $200 $400
Describe one function of government in the economy other than correcting externalities. Provide an example.

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When a corrective tax is created so that it equals the external costs linked to the production of a product, it will the price buyers pay and the market result becomes efficient. A decrease; more B decrease; less C increase; more D increase; less