Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 10, Problem 3PA
Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive.
a. Illustrate the market for alcohol, labeling the
b. On your graph, shade the area corresponding to the deadweight loss of the market equilibrium. (Hint: The deadweight loss occurs because some units of alcohol are consumed for which the
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
34. The graph below showing the costs and benefits of producing and consuming
gasoline. The dark line labeled Sp shows the Supply curve based on producers'
costs, and the dark line labeled Dc shows the Demand curve based on the
consumers' benefits. (Note, this is the same graph as in #33). Which of the following
shows the excess quantity produced by a free market as compared to the social
optimum quantity?
P
p2
ро
pl
0
q1 q0 q2
A
Is the excess quantity:
(A) the distance from q1 to q0;
(B) the distance from q1 to q2;
(C) the distance from q0 to q2;
(D) the distance from p1 to p2;
Please put your answer (A), (B), (C), or (D) in the text box.
E
Sp
B
Dc
с
3. Use the graph to answer the question that follows.Assume that the market shown is perfectly competitive with no externalities. If the production output is 15,000 units, then
A-the market is allocatively efficient
B-there is a shortage of the good
C-deadweight loss is being minimized
D-deadweight loss is being maximized
E- consumer and producer surplus are maximized
5.Use the graph to answer the question that follows.
What is the market equilibrium quantity and price at which there is no government regulation?
A-15, $17.50
B-20, $15
C-30, $25
D-35, $22.50
E- Indeterminate
Use the graph attached below as a starting point (either download it or print it out). Add curves, labels, etc. to this graph in order to show the following:
1. Show that this good has a $4/unit negative externality (external cost), such as pollution.
2. Shade the area that represents the Deadweight Loss (lost gains from trade) caused by the external cost.
3. Show a tax or subsidy wedge (whichever you think is appropriate) that will solve the problem of the external cost.
4. Show the socially optimal level of production that the Pigouvian tax or subsidy above will help the market to achieve.
You may use software or pencil and paper to complete this graph. Upload it here when you are done.
Chapter 10 Solutions
Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
Ch. 10.1 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.3 - Prob. 3QQCh. 10 - Prob. 1CQQCh. 10 - Prob. 2CQQCh. 10 - Prob. 3CQQCh. 10 - Prob. 4CQQCh. 10 - Prob. 5CQQCh. 10 - Prob. 6CQQCh. 10 - Prob. 1QR
Ch. 10 - Prob. 2QRCh. 10 - Prob. 3QRCh. 10 - Prob. 4QRCh. 10 - Prob. 5QRCh. 10 - Prob. 6QRCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Greater consumption of alcohol leads to more motor...Ch. 10 - Prob. 4PACh. 10 - The many identical residents of Whoville love...Ch. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PA
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Draw a graph that models a positive externality in consumption (label and clearly explain graph) Explain: i) The difference between the competitive equilibrium quantity and the socially optimal level quantity. ii) A possible intervention to bring the competitive equilibrium quantity closer to the socially optimal quantity. iii) An example of a setting in which this type of externality might occur (explain clearly how/why this externality happens).arrow_forwardThis summer, the temperature records on each other's feet seem to be beaten. In Sweden, the temperature has recently risen to 43 degrees and birds are falling from the sky over exhausted and dying. Carbon emissions are one of the main challenges facing mankind today. Explain the market failure caused by the emissions. Under competitive conditions, the government can use various control tools to establish efficient quantities, e.g. with a fee. Show the effect of such a solution on a diagram and explain in detail why an economical amount involves some pollution. In a monopoly situation, it is not as simple as establishing efficiency by charging emissions. Explain in words and pictures how the different interplay between the cost factors of a company and pollution costs can cause certain government tariffs on pollution to be cost-effective on the one hand and inefficient on the other.arrow_forwardSolve all questions compulsory...arrow_forward
- ECONOMICS Please Show Your Work With an Explanation This problem set explores what happens to pricing when we add network effects, which are a specific form of positive externality. You’ve invented a 3D fax machine. This cool technology is almost like a Star Trek teleporter. You can scan an object at one machine, which creates an exact copy at another 3D fax machine. It is so valuable that as more people use it, it becomes more valuable, and the price any given user is willing to pay increases in turn. Consider a scenario in which there are 12 possible users, who each value the fax machine at i*n, where i is the index of that user (from 1 to 12), and n is the number of other purchasing users. So, if no one buys the 3D fax machine, everyone values it at 0. However, as soon as one person buys the device, then the 12 possible users begin to value the product at 1, 2, … 12, respectively. If 2 people purchase, the 12 possible users’ valuations increase to 2, 4, … 24, and so on. Because…arrow_forward1. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good. ? PRICE (Dollars per unit) QUANTITY (Units) Supply Demand Demand Supply With this type of…arrow_forwardGrater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive. a.) Illustrate the market for alcohol, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, and the efficient level of output. b.) On your graph, shade the area corresponding to the deadweight loss of the market equilibrium. (Hint: The deadweight loss occurs because some units of alcohol are consumed for which the social cost exceeds the social value.) Explain.arrow_forward
- Address the question in the image.arrow_forwardDon’t know how to finish solvingarrow_forwardNegative externalities and fast food Task 6b Explain the concept of negative externalities Point value In no more than 200 words, briefly explain the concept of negative externalities. 4 points Does eating too much fast food generate a negative externality? Why or why not? Format - Evidence of negative externalities | Reflection (written) Point Answer box value Negative externalities and fast food Task 6c | Negative externality: Consuming too much fast food Create two demand and supply diagrams to demonstrate the following: In your first diagram show the negative externality of consuming too much fast food. Carefully label your diagram and identify the deadweight loss. In your second diagram add a tax to this market. Highlight what happens to consumption. In a dot point below your last diagram briefly tell us whether the second diagram has a deadweight loss. Point value 8 points Format - Evidence of negative externality of consuming too much fast food | Reflection (written) Answer box…arrow_forward
- Question 1 of 20 Attempt 2 Monopolies exist because of barriers to entry, obstacles that prevent other firms from entering an industry and competing for market share. For each case, indicate which barrier to entry applies. a. Coca-Cola's vast market share in the soft drink market: Network externalities Brand loyalty Control of a resource Legal barrier b. China's control of the market for rare earths (a group of minerals used to produce electronics): Economies of scale Network externalities Control of a resource Brand loyalty O Legal barrierarrow_forwardhow do you read this type of graph and know whats going onarrow_forwardViral infections such as flu are highly contagious. The number of infections and thus the spread of the disease can be prevented by getting vaccinated. However, the decision to take vaccine is voluntary and some people choose not to go for it for various reasons.] [What type of externality occurs by getting vaccinated against contagious diseases? Explain your answer in 100 words or less. [In a diagram, show the market equilibrium quantity of the vaccine. Is the quantity also socially efficient? Explain in 100 words or less and demonstrate using the same diagram. [Suggest one method to achieve a socially efficient outcome. Explain your answer in 100 or less words.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning
The growing economy of the electric car industry; Author: TRT World;https://www.youtube.com/watch?v=Qh2jXn_akmk;License: Standard Youtube License