Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 10, Problem 3PA
Subpart (a):
To determine
Classification of positive and negative externality.
Subpart (b):
To determine
Classification of positive and negative externality.
Subpart (c):
To determine
Classification of positive and negative externality.
Subpart (d):
To determine
Classification of positive and negative externality.
Subpart (e):
To determine
Classification of positive and negative externality.
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Identify at least one positive and negative externality from running a hamburger shop.
What is one example of how an externality could affect the price of your hamburger?
Negative 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…
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).
Chapter 10 Solutions
Principles of Microeconomics
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 - Prob. 3PACh. 10 - Greater consumption of alcohol leads to more motor...Ch. 10 - Prob. 5PACh. 10 - The many identical residents of Whoville love...Ch. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PACh. 10 - Prob. 10PA
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- Don’t know how to finish solvingarrow_forwardnot use ai please don'tarrow_forwardThe following are some products that generate negative externalities. What are the negative externalities associated with these products? a)The construction of condominium buildings that involve pile driving b) Ocean-based farmed salmon production: c) Cigarettes use Excessive alcohol consumption d)Automobile use (especially powered by fossil fuel)arrow_forward
- Explain the difference between a positive externality and a negative externality. Can both types of externalities result in market failure? Why or why not?arrow_forwardExternalities are a form of market failure. Identify two externalities related to Covid-19, one positive and one negative. Graph and explain how each externality affects the optimal amount of the good that is generating the externality.arrow_forwardUse 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.arrow_forward
- During the COVID-19 pandemic, alcohol consumption increased dramatically. In response, the government is considering increasing the tax rate on alcohol. It's known that the demand for alcohol is inelastic, and the supply of alcohol is perfectly elastic. Which of the following statements are true? (Select all that apply.) Question 5Answer a. A tax on alcohol is one way to make consumer internalize the cost of the externalities associated with drinking, such as long-term health implications. b. Regardless of how the tax is implemented, consumers will pay the full amount of the tax. c. It doesn't matter how the tax is implemented. d. Consumers and suppliers will split the burden of the tax. e. The government will collect more revenue if the tax is on the suppliers. f. Alcohol consumption will decrease more in the short-run than in the long-run. g. Alcohol consumption will decrease more in the long-run than in the short-run. h. There are positive…arrow_forwardGive an example of a positive and negative externality. Explain why market outcomes are inefficient in the presence of these externalities.arrow_forwardSolve all questions compulsory...arrow_forward
- draw a graph of a product without any externalityarrow_forwardwhy do externalities make market outcomes inefficient?arrow_forwardIf a positive demand-side externality (also called a positive externality in consumption) occurs, then: a. The market provides the efficient allocation. b. The market under-provides the product, meaning the market allocation is less than the efficient allocation. c. The market does not provided the product, hence market failure occurs. d. The market over-provides the product, meaning the market allocation is more than the efficient allocation.arrow_forward
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