If you can't see the graph below: Shows the demand, private cost, and social cost curves. Social Cost crosses the price axis at $450 and crosses Demand at $600 and 1000 units. Private Cost crosses the price axis at $50 and crosses Demand at $350 and 2000 units. Demand crosses price axis at $850. At 1000 units, Private Cost $200. y To reach the socially optimum level, the government could issue a . . . . of.... per unit.

If you can't see the graph below: Shows the demand, private cost, and social cost curves. Social Cost crosses the price axis at $450 and crosses Demand at $600 and 1000 units. Private Cost crosses the price axis at $50 and crosses Demand at $350 and 2000 units. Demand crosses price axis at $850. At 1000 units, Private Cost $200. y To reach the socially optimum level, the government could issue a . . . . of.... per unit.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 10PAE

See similar textbooks

Similar questions

There are two people. Each person's demand for a public good is P = 20 - Q. The marginal cost of providing the public good is given by MC2 = $12 (MC is not $24). The above graph summarizes the relevant information. The total demand for the two workers shown above is the vertical sum of the demand curve for each worker.(a) What is the socially efficient quantity of the public good?(b) How much will each person have to pay per unit to provide the socially efficient quantity?(c) What is the consumer surplus for each person based on the quantity determined in (a) and the price determined in (b)?(d) Given that this is a public good, if either one of the two people does not pay the price you have stated in (b), can they be prevented from consuming the good?
Pollution from the bright city lights makes it nearly impossible to stargaze within a city setting. The supply (private cost) and demand for electricity used in city lighting are shown in the graph. Suppose the external cost for an additional kilowatt hour of electricity is 5 cents. Drag the endpoints of the green line to draw in the social cost (private cost and external cost) curve for electricity. Place point O at the point corresponding with the socially optimal quantity and price for electricity. Price of electricity (cents per kWh)Quantity of electricity (kWh)01020304050SupplyDemandOSocial cost of light pollution Assume the government places an optimal Pigouvian tax on electricity used at night to reduce light pollution so that people can enjoy the stars. As a result of the Pigouvian tax, consumers pay a higher price for electricity at night and producers increase output. consumers pay a lower price for electricity and producers also lower output. consumers pay a…
When pollution (a negative externality) is created by firms, which of the following is NOT a valid way for the government to restore the social optimum? a. require firms to install pollution-abatement equipment b. require firms to change production techniques to reduce emissions c. levy a tax on the production of the good d. require firms to pay for the environmental damage they create e. offer a subsidy to firms to reduce their production costs
An externality, which is sometimes also called a (Spillover OR Social cost) , can have a negative or a positive impact on the third party. An externality occurs when an exchange between a (Buyer and seller OR Population of two cities) has an impact on a third party who (Is not OR is) part of the exchange. For a negative externality, the private costs of an action are (Less or More) than the costs imposed on society as a whole. For a positive externality, the private benefits of an action are (Less or More) than the social benefits. An example of positive externality is (Vccination OR Good wether), whereas an example of negative externality is (Population OR Hurricane)
PRICE OF CARS 1. Efficiency in the presence of externalities Cars impose many external costs on society: carbon dioxide emissions that contribute to air pollution, congestion on roadways, and so on. Therefore, the market equilibrium quantity of cars is not equal to the socially efficient quantity. The following graph shows the demand for cars (their marginal private benefit), the supply of cars (the marginal private cost of producing them), and the marginal social cost of cars, including both the marginal private cost and external costs. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially efficient quantity. Demand (MPB, MSB) QUANTITY OF CARS As a result, the market output is MSC + Market Output Socially Efficient Output Supply (MPC) the socially efficient output. (?) Which of the following policies could help the government achieve the socially efficient outcome? Check all that apply. ☐…
Consumers A, B, C, and D respectively have a willingness to pay of $130, $100, $80, and $50 for one widget. Firms W, X, Y, and Z each have capacity to produce one widget at respective costs of $10, $60, $90, and $110. If these are the only consumers and firms in this market, and there are no third party costs or benefits from widgets, what is the socially efficient quantity of widgets? 4 There is insufficient info to answer question 3 2
What are “public goods”? Pick a government good/service that you consume, define what makes it a public good (how is its non-rival and non-excludable). As we discussed in class, the existence of externalities creates an efficiency problem in the provision of these goods and services. Unlike the private sector, State and Local Governments can intervene. Using the example of the public good, you have provided, please provide an example of an externality that will impact its provision, and detail how a government could/should intervene.
The market for some public good consists of only two consumers, Elena and Talia. The marginal cost of providing this good is described by MC = 3 + 5Q. Elena's MWTP = 40 - 3Q and Talia's MWTP = 10 - 2Q. What is the socially-efficient quantity of this good? Round to the nearest whole unit
What is an externality? How do they affect market efficiency? If an externality is present, where is the socially optimal point of production? Where will the market produce if there is no government intervention? How do we get from the private market equilibrium to the socially optimal one?
With the existence of negative externality, determine the socially efficient level of output and price. When negative externality exists, the firms loose profits. Calculate the size of the firms’ loss.) On the other hand, the community’s gain from the social efficient allocation level. Interpret the results. Determine the net gain (or loss) to the society.
Cars impose many external costs on society: carbon dioxide emissions that contribute to air pollution, congestion on roadways, and so on. Therefore, the market equilibrium quantity of cars is not equal to the socially optimal quantity. The following graph shows the demand for cars (their private value), the supply of cars (the private cost of producing them), and the social cost of cars (the private cost and external costs).
Consider the market illustrated in the figure to the right. Supply curve S, represents the private cost of production and demand curve D₁ represents the private benefit from consumption. Suppose the consumption of this good creates a positive externality. In turn, the social benefit from consumption is represented by demand curve D₂. Show how the externality affects market efficiency. Use the triangle drawing tool to shade in the new economic surplus (New surplus) or the deadweight loss (Deadweight loss) created by the positive externality. Properly label this shaded area. Carefully follow the instructions above, and only draw the required objects. Price Quantity S₁ D₁ D₂ Q