Examples of externality.

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Answer 1

Question

Chapter 10, Problem 1QR

To determine

Examples of externality.

Expert Solution & Answer

Explanation of Solution

The classic example of an externality is pollution. The production of goods emits pollutants in the environment, which lead to different kinds of pollution like air pollution water pollution, and so forth. These pollutions cause health problems for people who live near the production area. The examples of positive externality are restoration of historical buildings, facts that lead to the formation of new research and education, and so forth.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to a third party other than the immediate market participants.

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Students have asked these similar questions

1. A firm has the following demand function: P = 60 – 0.5Q and its total cost is defined by TC= 13+ Qa. Find the maximum revenue b. Find the production to optimize the profit. c. Verify if the marginal revenue and marginal cost are the same at the profit-maximizing productionlevel. Exercise 6From the point of view of the firm, what decision criteria have been found relevant in the analysis ofproduction and profit? Provide two refernces with your answer.

5. Some people find options expensive and use more complex structures to reduce the cost. For example, consider buying a call with a strike of $55 and selling a call with a strike of $60. a. What is the cost of establishing this combined position? b. What is the payoff of the combined position if the market price goes to $60? c. What is the payoff of the combined position if the market price goes to $100?

3. An investor has $1,000 to invest. They believe the price of the underlier will increase to $60 within one year. a. How many shares of stock could they buy with the $1,000 at the current price of $50, and how much would they make if the share price increased to $60? b. How many calls with a strike of $55 could they buy for the same $1,000, and how much would they make if the share price increased to $60? c. How much would they make (or lose) from the stock and from the calls if the share price declined to $40? 4. What is the premium on a call with a strike of $0.01? Why is the premium so close to the $50 share price?

Answer 2

Question

Chapter 10, Problem 1QR

To determine

Examples of externality.

Expert Solution & Answer

Explanation of Solution

The classic example of an externality is pollution. The production of goods emits pollutants in the environment, which lead to different kinds of pollution like air pollution water pollution, and so forth. These pollutions cause health problems for people who live near the production area. The examples of positive externality are restoration of historical buildings, facts that lead to the formation of new research and education, and so forth.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to a third party other than the immediate market participants.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 10, Problem 1QR

To determine

Examples of externality.

Expert Solution & Answer

Explanation of Solution

The classic example of an externality is pollution. The production of goods emits pollutants in the environment, which lead to different kinds of pollution like air pollution water pollution, and so forth. These pollutions cause health problems for people who live near the production area. The examples of positive externality are restoration of historical buildings, facts that lead to the formation of new research and education, and so forth.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to a third party other than the immediate market participants.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 1QR

To determine

Examples of externality.

Expert Solution & Answer

Explanation of Solution

The classic example of an externality is pollution. The production of goods emits pollutants in the environment, which lead to different kinds of pollution like air pollution water pollution, and so forth. These pollutions cause health problems for people who live near the production area. The examples of positive externality are restoration of historical buildings, facts that lead to the formation of new research and education, and so forth.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to a third party other than the immediate market participants.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1QR

To determine

Examples of externality.

Expert Solution & Answer

Explanation of Solution

The classic example of an externality is pollution. The production of goods emits pollutants in the environment, which lead to different kinds of pollution like air pollution water pollution, and so forth. These pollutions cause health problems for people who live near the production area. The examples of positive externality are restoration of historical buildings, facts that lead to the formation of new research and education, and so forth.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to a third party other than the immediate market participants.

Answer 6

Chapter 10, Problem 1QR

To determine

Examples of externality.

Expert Solution & Answer

Explanation of Solution

The classic example of an externality is pollution. The production of goods emits pollutants in the environment, which lead to different kinds of pollution like air pollution water pollution, and so forth. These pollutions cause health problems for people who live near the production area. The examples of positive externality are restoration of historical buildings, facts that lead to the formation of new research and education, and so forth.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to a third party other than the immediate market participants.

Answer 7

Chapter 10, Problem 1QR

To determine

Examples of externality.

Answer 8

Expert Solution & Answer

Explanation of Solution

The classic example of an externality is pollution. The production of goods emits pollutants in the environment, which lead to different kinds of pollution like air pollution water pollution, and so forth. These pollutions cause health problems for people who live near the production area. The examples of positive externality are restoration of historical buildings, facts that lead to the formation of new research and education, and so forth.