Write down a model of positive production externality with two firms, in which the production activities of one firm directly affects the production/cost of the other firm. State and explain the key assumptions of the model. Using the model, answer the following questions: (a) Explain why the presence of a positive production externality could prevent the realisation of an efficient outcome. (b) Name a possible cure for the positive production externality and explain how it could solve the inefficiency problem.

Q: Suppose the government, as part of its fight against COVID, allows restaurants to open but requires…

A: Since you have asked a question with multiple sub-parts, we would answer the first three for you. To…

Q: QUESTION 28 Which of the following box(es) contain(s) the items that often require the government to…

A: An externality occurs from the consumption or production of a good or service, and causing in a…

Q: Table 2 Imagine a small town in which only two residents, Lisa and Mark, own wells th Time left 1:57…

A: The market has a high number of buyers and sellers, where they operate with a same price and…

Q: Market failure occurs because O A. the market system forces individuals to consider the social…

A: Market Failure  In terms of economics, market failure refers to a situation where there is an…

Q: In 2006, the Australian Government incorporated research into corporate social responsibilities to…

A: Public interest theory: Public Interest Theory is a government assistance financial matter and…

Q: Use the theories of market failure and government intervention to explain the reasons for this

A: The coffee companies are hiding the fact of negative externalities that are being caused by the…

Q: QUESTION 28 Suppose that in a perfectly competitive market, the demand curve is given by P = 60 –…

A: * ANSWER :-

Q: Is land preservation considered a public good? On one graph draw the MPB, MSB, and MPC = MSC curves.…

A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…

Q: If 10 million toy cars are sold. which means that: The production of toy cars is currently at an…

A: The social optimum is obtained at the point where the marginal benefits are equal to the marginal…

Q: The graph shows the marginal cost of producing stuffed animals and the marginal benefit from stuffed…

A: Marginal benefit (MB) means the additional satisfaction or utility that a consumer derives from…

Q: Someone might oppose the Clean Power Plan when its benefits exceed its costs because O A. climate…

A: Clean Power Plan was designed to help the rapidly growing trend toward cleaner and less polluting…

Q: How should the government initially allocate transferable emissions permits among firms if it wants…

A: The objective of the question is to understand the most cost-effective way for the government to…

Q: O internal cost. O internal benefit. external cost. external benefit. ep .lassily

A: Internal and external costs & benefits are the economic concepts. The costs explain the expenses…

Q: A familiar example of a negative externality is traffic congestion. In principle, it should be…

A: In an economy, externality refers to the term that is used to explain the effect of an individual's…

Q: 12. When a firm is maximizing profit it will necessarily be: A) maximizing profit per unit of…

A: Microeconomics refers to the branch of economics that studies the behavior of a single person or…

Q: decided to increase production to five trucks. The following graph gives the demand curve faced by…

A: The production decision of an enterprise entails deciding the ideal quantity of goods or services to…

Q: Explain three ways economist define market efficient. How does efficiency relates to the economist's…

A: Externalities, monopoly, information asymmetries, and factor immobility are all examples of market…

Q: Which of the following characteristics is required if a good is to be efficiently provided by…

A: In an economy, product and service are classified into different categories according to their…

Q: An externality arises when one economic agent's actions affect the welfare of others in ways that…

A: There are two externalities that can be considered here, either it can be positive externalities or…

Q: What makes climate change an economic problem? And if it is, how should policy deal with it? Your…

A: Human activities influence the climate system and anthropogenic discharge of green-house gas is the…

Q: For each of the following statements indicate if there is/could be an externality problem. Explain…

A: An externality is an economic term describing a cost or benefit incurred or received by a third…

Q: A local school administrator observes an increase in the number of flu cases in the public schools…

A: Externality refers to the external cost and benefits that are imposed on third parties without their…

Q: a. what is the profit maximizing quantity of the good for The industry (Q1) when it is not forced to…

A: Externality refers to spill-over effect of a good on third party which is not involved in either…

Q: 3. The lockdown policy Since Dec. 23th, Xi'an has implemented a strict lockdown policy to combat a…

A: As we know the corona cases was increasing and many countries are imposing strict lockdown in their…

Q: Suppose that a mayor of a large city believes strongly that education provides great benefits to the…

A: Education is considered as the example of positive externality. The term positive externality means,…