The following table lists the marginal cost and marginal private benefit of the electric car market:QuantityMarginal Cost200001000025000150003000020000350002500040000300004500035000Marginal Private Benefit400003500030000250002000015000In addition, it is estimated that the marginal external benefit from the consumption of electric cars is $10000Given a supply shock, the price of gasoline has risen and the marginal private benefit has shifted by $10000.What quantity of cars would maximize social benefit?electric cars

Given,Marginal External Benefit: MEB=$10,000This external benefit will be added to the Marginal…

Answered: The following table lists the marginal…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...

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Side 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 20
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.
The marginal private cost of mulch production is MPC = 20 + 3Q, where Q is the amount of mulch produced. The marginal benefit (both private and social) of mulch is MB = 100 – Q. In addition to the private costs faced by producers of mulch, people who walk or drive past the area where the mulch is produced also face costs because of the horrible smell of the mulch; the marginal external cost generated by the mulch is MEC = 10 + Q. How much mulch will be produced by the free market? What is the efficient quantity of mulch? Calculate the amount of deadweight loss in this market, and clearly explain what this number means. Suppose that the government realizes that the current amount of mulch produced by the free market is inefficient, and decides to correct this inefficiency by taxing the production of mulch. How large should the tax per unit of mulch be to induce the market to produce…
The marginal private cost of mulch production is MPC = 20 + 3Q, where Q is the amount of mulch produced. The marginal benefit (both private and social) of mulch is MB = 100 – Q. In addition to the private costs faced by producers of mulch, people who walk or drive past the area where the mulch is produced also face costs because of the horrible smell of the mulch; the marginal external cost generated by the mulch is MEC = 10 + Q. How much mulch will be produced by the free market? Suppose that the government realizes that the current amount of mulch produced by the free market is inefficient, and decides to correct this inefficiency by taxing the production of mulch. How large should the tax per unit of mulch be to induce the market to produce the efficient amount, and why would such a tax accomplish the goal of making the market operate efficiently?
Negative externalities and fast food Task 6b Explain the concept of negative externalities Point value In no more than 200 words, briefly explain the concept of negative externalities. 4 points Does eating too much fast food generate a negative externality? Why or why not? Format - Evidence of negative externalities | Reflection (written) Point Answer box value Negative externalities and fast food Task 6c | Negative externality: Consuming too much fast food Create two demand and supply diagrams to demonstrate the following: In your first diagram show the negative externality of consuming too much fast food. Carefully label your diagram and identify the deadweight loss. In your second diagram add a tax to this market. Highlight what happens to consumption. In a dot point below your last diagram briefly tell us whether the second diagram has a deadweight loss. Point value 8 points Format - Evidence of negative externality of consuming too much fast food | Reflection (written) Answer box…
Suppose that a vaccine is developed for a highly contagious strain of flu. The likelihood that anyone will get this flu decreases as more people receive the vaccine. One of the demand curves below represents the private demand for the vaccine and the other represents the social demand for the vaccine. Price (5/dose) 110T 100 90 80 70 60 50 40 30 20 10 0 0 25 50 75 100 125 150 175 200 225 250 Quantity (doses/day) The total social benefit of 75 doses is: D1 02
Supply curves for the production of oil in Sanaton are shown in the diagram below. Supply based on both private and private+social costs is shown. Answer the following questions based on the diagram. Supply (Private + Social) Supply (Private) VE (16000 $70 (22000,$59) Demand Price Quantity What is the equilibrium quantity when negative externalities of producing oil are not taken into account? What is the equilibrium price when negative externalities are not taken into account?
The table below shows the demand for pollution permits to emit hydrocarbons in a particular industrial park. Each permit allows the owner to release one tonne of pollutants into the atmosphere. Price per Pollution Permit Quantity of Permits $4,500 100 4,000 200 3,500 300 3,000 400 2,500 500 2,000 600 1,500 700 were charged, how many tonnes of pollutants would be discharged into the atmosphere, assuming a straight-line a. If fee for a pollution perm demand curve? Quantity: tonnes b. Suppose government were to set a fee of $2,500 per pollution permit. How many tonnes of pollutants would now be dumped? What is the total revenue received by government? Quantity: tonnes Total revenue: $ c. Suppose that a new technology allows for a significant reduction in hydrocarbons at a relatively low cost so that the demand for pollution permits in the industrial park drops by 200 tonnes. Assuming that government holds the permit fee at $2,500, how many tonnes of pollutants would now be dumped? What…
ils Consider the market for electric cars. Suppose that a electric car manufacturing facility dumps Slouge in externality for those living downstream from the facility. Producing additional electric cars imposes a constant per-unit external cost of $420. The following graph shows the demand (private value) curve and the supply (private cost) curve for electric cars. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $420 per unit. 1400 1250 PRICE (Dollars per unit of electric cars) 1120 960 840 700 160 420 200 140 0 D 1 O O 3 QUANTITY (Units of electric cars) 0 Supply (Private Cost) Demand (Private Value) Social Cost The market equilibrium quantity is units of electric cars, but the socially optimal quantity of electric car production is units To create an incentive for the firm to produce the socially optimal quantity of electric cars, the government could impose a per unit of electric cars.
what are some positive pecuniary externalities from trains?
20 Supply Social Value 18 16 14 PRICE ㄓ 12 10 8 6 4 2 Demand 24 6 8 10 12 14 16 18 20 QUANTITY The graph indicates what type of externality? Positive In this type of market failure, is the quantity over-provided or under- provided? By how much? What is the socially optimal price? over-provided by 2 units $10 What is the socially optimal quantity? 10 units What is the market failure price? $8 What is the market failure quantity? 8 units
Price $40 Marginal Social Cost $36 $32 Supply/ Marginal Private Cost $28 $24 $20 $16 $12 $8 $4 Demand 10 20 30 40 50 60 70 80 90 Quantity 1) Does the above diagram depict a positive externality or a negative externality? 2) What is the market quantity and price? 3) What is the socially optimal quantity? 4) What is the socially optimal price? 5) At the socially optimal price and quantity, what is the consumer surplus? 6) At the socially optimal price and quantity, what is the producer surplus? Remember, producers care about their private costs.| Next, suppose that the government steps in to mandate the socially optimal quantity, but does not allow the price to rise. 7) What is the consumer surplus? 8) What is the producer surplus?

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