Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 11, Problem 2IAPA
To determine
To explain:
The quantity of spraying that can be provided by a private control program and the quantity of spraying that can be considered efficient.
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The table below shows the total benefit for cleaning up the roadside for
the state.
Quantity of Pollution Cleanup
Total Beneft of Cleanup
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Multiple Choice
$200
$350
5475
$575
4
5
Each hour of cleaning up the roadside costs the city $100. How many
hours should the city spend on cleaning up the roadside?
This graph represents the tobacco industry.
IPrice
16
14
Social Cost
12
10
Private Cost
8
6
4
Demand
200
500 650
Quantity
a) Without any government intervention, what is the market determined price and quantity?
b) What is the price of the externality?
c) What is the socially optimal price and quantity?
d) What should the government do (impose a tax or provide a subsidy) to internalize this externality? What is the amount of the the corrective tax/subsidy needed to be to move the outcome from the
market equilibrium to the socially-optimal outcome?
a. Place point A at the equilibirum outcome. Place point B at the socially efficient outcome.
Market for cigarettes
10
Marginal social cost
В
Marginal private cost (supply)
8
A
7
Demand
4
3
1
30
60
90
120
150
180
210
240
Quantity of cigarettes (millions of packs)
CO
LO
Price ($)
Chapter 11 Solutions
Foundations of Economics (8th Edition)
Ch. 11 - Prob. 1SPPACh. 11 - Prob. 2SPPACh. 11 - Prob. 3SPPACh. 11 - Prob. 4SPPACh. 11 - Prob. 5SPPACh. 11 - Prob. 6SPPACh. 11 - Prob. 7SPPACh. 11 - Prob. 8SPPACh. 11 - Prob. 9SPPACh. 11 - Prob. 10SPPA
Ch. 11 - Prob. 1IAPACh. 11 - Prob. 2IAPACh. 11 - Prob. 3IAPACh. 11 - Prob. 4IAPACh. 11 - Prob. 5IAPACh. 11 - Prob. 6IAPACh. 11 - Prob. 7IAPACh. 11 - Prob. 8IAPACh. 11 - Prob. 9IAPACh. 11 - Prob. 1MCQCh. 11 - Prob. 2MCQCh. 11 - Prob. 3MCQCh. 11 - Prob. 4MCQCh. 11 - A renewable common resource is used sustainably if...Ch. 11 - Prob. 6MCQCh. 11 - Prob. 7MCQCh. 11 - When ITQs are assigned, the market price of an ITQ...
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