PRINCIPLES OF MICROECONOMICS (OER)
2nd Edition
ISBN: 9781947172340
Author: Timothy Taylor, Steven A. Greenlaw
Publisher: OpenStax
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Textbook Question
Chapter 13, Problem 1SCQ
Do market
Expert Solution & Answer
To determine
The analysis whether the positive externalities are reflected on demand curve or not.
Answer to Problem 1SCQ
The market demand does not reflect or indicates the effect of positive externalities as it shows only private benefits.
Explanation of Solution
The market demand curve is not meant for reflecting the positive externalities. The reason is the nature of benefits in the positive externalities i.e. they are spillover to the parties which means that they are type of social benefits. The market demand curve indicates the private benefits of the people who are the consumer of the goods and do not show the social benefits on the curve.
Conclusion:
Thus, the positive externalities cannot be reflected on the demand curve of market.
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Short Description
Fiscal Policy
Graph Details
Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis.
The x-axis is scaled from 0 to 800 billion dollars with an increment of 40 billion dollars, and the y-axis is scaled from 30 to 150 units with an increment of 5 units.
Object Details
On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (160, 70)Point 2 at (720, 140)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (80, 110)Point 2 at (640, 40)A vertical Long-run Aggregate Supply, LRAS with two endpoints:Point 1 at (400, 145)Point 2 at (400, 30)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (720, 60)Point 2 at (160, 130)Two Reference Points:Lines AS, AD, and LRAS intersect at (400, 100)Lines AS and AD1 intersect at (280, 85)
a. How much does aggregate demand need to change to restore the…
Fiscal Policy
Graph Details
Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis.
The x-axis is scaled from 0 to 1000 billion dollars with an increment of 50 billion dollars, and the y-axis is scaled from 0 to 180 units with an increment of 10 units.
Object Details
On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (200, 40)Point 2 at (800, 160)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (200, 160)Point 2 at (800, 40)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (350, 170)Point 2 at (900, 60)A vertical Long-run Aggregate Supply, LRAS line with two endpoints:Point 1 at (500, 170)Point 2 at (500, 0)Two Reference Points:Lines AS and AD1 intersect at (600, 120)Lines AS, AD, and LRAS intersect at (500, 100)
a. How much does aggregate demand need to change to restore the…
Chapter 13 Solutions
PRINCIPLES OF MICROECONOMICS (OER)
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