EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 7, Problem 9SP
(a)
To determine
Describe the impact of tax on the number of leaf blowers sold.
(b)
To determine
Illustrate the social optimal
(b)
To determine
Illustrate the private market price.
(d)
To determine
Illustrate the net price after taxes.
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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…
In the figure here, the producer surplus is represented by the area
B
b
d
Quantity
a
S
D
b
Oc
Od
Topic: Externality
Use the table below to answer the questions:
A. Find the equilibrium price, assuming sellers ignore negative externalities.
B. Find the equilibrium quantity, assuming sellers ignore negative externalities.
C. Find the optimal price, including external costs. Find the optimal quantity, including external costs.
Chapter 7 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- #8arrow_forwardIdentify 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?arrow_forwardHow market equilibrium is found with Pollution Abatement Subsidy? Also draw graph and interpret it.arrow_forward
- 10. A local drama company proposes a new neighborhood theater in San Francisco. Before approving the permit, the city planner completes a study of the theater's impact on the surrounding community. a. One finding of the study is that the theaters attract traffic, which adversely affects the community. The city planner estimates that the cost to the community from the extra traffic is $5 per ticket. What kind of an externality is this? Why? b. Graph the market for theater tickets, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output. Also show the per-unit amount of the externality. c. Upon further review, the city planner uncovers a second externality. Rehearsals for the plays tend to run until late at night, with actors, stagehands, and other theater members coming and going at various hours. The planner has found that the increased foot traffic improves the safety of the surrounding streets, an estimated…arrow_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_forwardExplains it correctlyarrow_forward
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