Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 12, Problem 41P
Refer to Table 12.2. The externality created by the refrigerator production was
However, once we accounted for both the private and additional external costs, the market
If the external costs were
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Students have asked these similar questions
Refer to Table 12.2. The externality created by the refrigerator production was $100. However, once we accounted for both the private and additional external costs, the market price increased by only $50. If the external costs were $100 why did the price only increase by $50 when we accounted for all costs?
Price
Quantity Demanded
Quantity Supplied before Considering Pollution Cost
Quantity Supplied after Considering Pollution Cost
$600
50,000
40,000
30,000
$650
45,000
45,000
35,000
$700
40,000
50,000
40,000
$750
35,000
55,000
45,000
$800
30,000
60,000
50,000
$850
25,000
65,000
55,000
$900
20,000
70,000
60,000
Table12.2 A Supply Shift Caused by Pollution Costs
Refer to the following table. The externality created by the production of refrigerators was $100. However, once both the private and additional external costs were taken into consideration, the market price increased by only $50. If the external costs were $100 why did the price only increase by $50 when all the costs were taken into account? Price = $600, $650, $700, $750, $800, $850, $900 Quantity Demanded = 50,000, 45,000, 40,000, 35,000, 30,000, 25,000, 20,000 Quantity Supplied before Considering Pollution Cost = 40,000, 45,000, 50,000, 55,000, 60,000, 65,000, 70,000 Quantity Supplied after Considering Pollution Cost = 30,000, 35,000, 40,000, 45,000, 50,000, 55,000, 60,000
Economics
MPB (Marginal Private Benefit) =20-4Q (like a
Demand Equation).
MPC (Marginal Private Cost) = 4+2Q (like a Supply
Equation).
MEB (Marginal External Benefit) = 0 (an external
benefit is a positive externality).
MEC (Marginal External Cost) = 0.5Q(an external
cost is a negative externality).
Suppose Power for Health Earth owned the rights
to pollute the atmosphere of the City of Atlanta,
and it is negotiating with concerned residents
willing to pay the company (Great Power) to
produce less coal energy.
For the 8th unit of coal energy, determine the
range within which payment would be acceptable
to Great Power and the concerned residents.
%3D
1.) Show the following in the graph:
a. the 8th unit
b. the unit price Great Power would take
c. the unit price the concerned residents would
раy
PLEASE HELP
Chapter 12 Solutions
Principles of Economics 2e
Ch. 12 - Identify the following situations as an example of...Ch. 12 - Identify whether the market supply curve will...Ch. 12 - For each of your answers to Exercise 12.2, will...Ch. 12 - Table 12.5 provides the supply and demand...Ch. 12 - Consider two approaches to reducing emissions of...Ch. 12 - Classify the following pollution-control policies...Ch. 12 - An emissions tax on a quantity of emissions from a...Ch. 12 - Four films called Elm, Maple, Oak, and (Shelly,...Ch. 12 - The rows in Table 12.7 show three market-oriented...Ch. 12 - Suppose a city releases 16 million gallons of raw...
Ch. 12 - The state of Colorado requires oil and gas...Ch. 12 - Consider the case of global environmental problems...Ch. 12 - A country called Sherwood is very heavily covered...Ch. 12 - What is an externality?Ch. 12 - Give an example of a positive externality and an...Ch. 12 - What is the difference between private costs and...Ch. 12 - In a market without environmental regulations,...Ch. 12 - What is command-and-control environmental...Ch. 12 - What are the three problems that economists have...Ch. 12 - What is a pollution charge and what incentive does...Ch. 12 - What is a marketable permit and what incentive...Ch. 12 - What are better-defined property rights and what...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - As the extent of environmental protection expands,...Ch. 12 - What are the economic tradeoffs between low-income...Ch. 12 - What arguments d0 low-income countries make in...Ch. 12 - In the tradeoff between economic output and...Ch. 12 - What does a point inside the production...Ch. 12 - Suppose you want to put a dollar value on the...Ch. 12 - Would environmentalists favor command-and-control...Ch. 12 - Consider two ways of protecting elephants from...Ch. 12 - Will a system of marketable permits work with...Ch. 12 - Is zero pollution possible under a marketable...Ch. 12 - Is zero pollution an optimal goal? Way or why not?Ch. 12 - From an economic perspective, is it sound policy...Ch. 12 - Recycling is a relatively inexpensive solution to...Ch. 12 - Can extreme levels of pollution hurt the economic...Ch. 12 - How can high-income countries benefit from...Ch. 12 - Technological innovations shift the production...Ch. 12 - Show the market for cigarettes in equilibrium,...Ch. 12 - Refer to Table 12.2. The externality created by...Ch. 12 - Table 12.12, shows the supply and demand...Ch. 12 - A city currently emits 15 million gallons (MG) of...Ch. 12 - In the Land of Purity, there is only one form of...
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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 standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.arrow_forwardTable 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?arrow_forwardProblem 1: Externality The weekly supply and demand for packs of cigarettes in the United States is given in the figure below. Suppose cigarette smoking causes an external cost on nonsmokers, as shown by the social benefit curve on the graph. Price ($) 36 34 32 30 - 28 26 - 24 22 - EMC S SEMC pvt 20 - 18- 16 - 14 - 12 - 10- 8 MB pvt social 2 MB 10 12 14 16 18 20 22 24 26 28 30 32 Pack of cigarettes (millions) a. This is a [ Select ] [ Select ] externality.arrow_forward
- Consider the market for pharmaceuticals. Suppose that a pharmaceutical factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing additional pharmaceuticals imposes a constant per-unit external cost of $120. The following graph shows the demand (private value) curve and the supply (private cost) curve for pharmaceuticals. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $120 per unit. ? PRICE (Dollars per unit of pharmaceuticals) 800 720 640 560 480 400 3:20 240 160 80 0 0 O 1 O ☐ The market equilibrium quantity is O 2 3 5 QUANTITY (Units of pharmaceuticals) 4 6 Supply (Private Cost) Demand (Private Value) 7 Social Cost units of pharmaceuticals, but the socially optimal quantity of pharmaceuticals production is To create an incentive for the firm to produce the socially optimal quantity of pharmaceuticals, the government could impose a per unit of pharmaceuticals.…arrow_forwardIn the market for a certain pesticide, the following equations represent the private demand and supply: Private Demand: QD = 160 - P Private Supply: QS = 4P The use of this pesticide has a negative externality that affects nearby ecosystems, which is not reflected in the market price. The external cost is estimated to be $5 per unit of pesticide. By how much is the pesticide overconsumed under perfect competition? A) 1 units B) 3 units C) 4 units D) 5 units E) none of the abovearrow_forwardSide 19 A mine owner faces the following marginal cost (MC) function: MC= 100 +15*X Where X is tons of the mineral extracted The mining of the mineral has external costs. The marginal external cost (MEC) has the following function: MEC = 5*X Where X is the tons of the mineral extracted. The (marginal) price curve (PC) has the following function: PC= 600 -5*X Where X is tons of the mineral the bought What is the optimal extraction level in tons? Vælg én svarmulighed O 15 O 18 O 23 O 20arrow_forward
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