Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 11, Problem 7PA
Subpart (a):
To determine
Cost benefit analysis.
Subpart (b):
To determine
Cost benefit analysis.
Subpart (c):
To determine
Cost benefit analysis.
Subpart (d):
To determine
Cost benefit analysis.
Subpart (e):
To determine
Cost benefit analysis.
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Students have asked these similar questions
a. When a firm imposes an external social cost (negative externality), the government should impose a tax on production equal to the externality cost to ensure that the market will achieve the socially optimal outcome.
Select one:
True
False
b. The socially optimal level of emissions of most pollutants is zero.
Select one:
True
False
c. Externalities are only inefficient when they impose a cost. They are not inefficient when they bestow a benefit.
Select one:
True
False
What is the concept of a negative externality in economics? A. A benefit received by individuals who did not incur the cost B. A cost incurred by individuals who did not receive the benefit C. A situation where external parties receive equal benefits and costs D. A situation where the government intervenes in the market
Consider a market with a positive externality. The market will tend to.... the good because the market participants tend
to ignore the.... of their decision.
A. underproduce; external social benefit
B. overproduce; external social benefit
C. underproduce; private benefit
D. overproduce; private benefit
Explain why.
Chapter 11 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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- Question 19 Which of the following best captures the notion of external cost? a. Drugs damage the health of the user. b. Floods reduce the output of commercial farms. c. Passive smoking damages the health of nearby non-smokers. d. a smaller harvest leads to lower income for farmers. Question 20 The optimal level of output can be achieved by levying a tax on a company producing a negative externality. This should be set a level that is equal to: a. the marginal cost of a curve b. the social marginal cost curve c. the difference between the social marginal cost and the firm's marginal cost. d. the total of the social marginal cost and the firm's marginal cost. Question 21 If we assume that making and consuming a product leads to externalities, which of the following would be the Pareto efficient level? a. If marginal private benefit matches marginal social benefit. b. If marginal social cost matches marginal social benefit. c. If marginal private cost matches marginal private benefit. d.…arrow_forwardWhat is a public good? What are its two defining characteristics? Provide an example.arrow_forward1. The Government of Yokuku considers applying one of the following policies: a tax or a standard, in order to reduce pollution level from P to Po. The government economist drew the following graph, representing the marginal abatement cost (MAC) to the polluters, the marginal damage to the society (MD), the optimal tax level (Tax level) and the socially optimal pollution level (Po). 1.1. What is the total tax cost under the standard policy?a. There is no tax cost under the standard policyb. Bc. Cd. B+C 1.2. What is the total tax cost under the tax policy?a. There is no tax cost under the tax policyb. Bc. Cd. B+C 1.3. What is the total social cost under tax policy?a. A+2B+Cb. A+Bc. B+Cd. A+B+Carrow_forward
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- The residents of Orléans, Ontario enjoy seeing fireworks over Petrie Island on Canada Day. Each of the community's 1000 residents places a $5 value on the experience. a. What are the defining characteristics of a public good? b. If the cost of putting on a fireworks display is $1000. Would it be socially optimal to have a Canada Day fireworks display in Orléans? c. Would the private market result in a fireworks display? d. Could governments provide a solution to achieving the efficient level of production?arrow_forwardWhat are the two characteristics of public goods? What is the free-rider problem as it related to public goods? Is U.S. border patrol a public good or a private good? Explain.arrow_forwardWhich of the following represents the true economic cost of production when firms produce goods that cause negative externalities? A. the social cost of production. B. the private cost of production. C. the external cost of production. D. the explicit cost of production.arrow_forward
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