Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 4, Problem 17SQ
To determine
The impact of external benefits of good X.
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a. The socially optimal level of production is ____units.
b. But, the market will end up producing
____units
a. The socially optimal level of production is how many units?
b. The market will end up producing how many units?
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
If a positive demand-side externality (also called a positive externality in consumption) occurs, then:
a. The market provides the efficient allocation.
b. The market under-provides the product, meaning the market allocation is less than the efficient allocation.
c. The market does not provided the product, hence market failure occurs.
d. The market over-provides the product, meaning the market allocation is more than the efficient allocation.
Chapter 4 Solutions
Micro Economics For Today
Ch. 4.2 - Prob. 1YTECh. 4.2 - Prob. 2YTECh. 4.2 - Prob. 3YTECh. 4.2 - Prob. 4YTECh. 4.3 - Prob. 1YTECh. 4.3 - Prob. 2YTECh. 4 - Prob. 1SQPCh. 4 - Prob. 2SQPCh. 4 - Prob. 3SQPCh. 4 - Prob. 4SQP
Ch. 4 - Prob. 5SQPCh. 4 - Prob. 6SQPCh. 4 - Prob. 7SQPCh. 4 - Prob. 8SQPCh. 4 - Prob. 9SQPCh. 4 - Prob. 10SQPCh. 4 - Prob. 1SQCh. 4 - Prob. 2SQCh. 4 - Prob. 3SQCh. 4 - Prob. 4SQCh. 4 - Prob. 5SQCh. 4 - Prob. 6SQCh. 4 - Prob. 7SQCh. 4 - Prob. 8SQCh. 4 - Prob. 9SQCh. 4 - Prob. 10SQCh. 4 - Prob. 11SQCh. 4 - Prob. 12SQCh. 4 - Prob. 13SQCh. 4 - Prob. 14SQCh. 4 - Prob. 15SQCh. 4 - Prob. 16SQCh. 4 - Prob. 17SQCh. 4 - Prob. 18SQCh. 4 - Prob. 19SQCh. 4 - Prob. 20SQ
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Similar questions
- Let the supply and demand for widgets be given by the following schedule. Price: 3, 4, 5, 6, 7, 8, 9, 10, 11 Quantity Supplied: 100, 200, 300, 400, 500, 600, 700, 800, 900 Quantity Demanded: 900, 800, 700, 600, 500, 400, 300, 200, 100 a. What quantity will be produced here? b. What quantity is efficient if there are no external costs or benefits? c. What quantity is efficient if there is an external cost of $6 per unit from pollution caused by the widget factories?arrow_forwardGraphically, the effects of an external benefit can be shown as A. a leftward shift of the market demand curve. B. a leftward shift of the market supply curve. C. a downward movement along the market demand curve. D. a rightward shift of the market demand curve.arrow_forwardPlease answer the following questions.1. Explain the factors affecting Demand.2. Explain the difference between positive and negative externalities alongwith an example.3. How are public goods different from private goods?4. Explain the Law of Supply.5. With regard to demand and Supply, explain the point of MarketEquilibrium.arrow_forward
- Define social benefit.arrow_forwardQUESTION 5 Suppose 20 people each have the demand Q = 20-P for streetlights and 5 people have the demand Q = 18-2P for streetlights. The cost of building each streetlight is $10. a. Write the social marginal benefit equation: MBS = Type integers. b. The socially optimal number of street lights is places. Q/2. Hint Hint: Type the number in two decimal socumarrow_forwardThe diagram to the right depicts the market for cough medicine in a small town. The quantity of cough medicine is measured in bottles sold per week; price is measured in dollars. The townspeople are happier and healthier because people who have colds and flus buy and take the medicine and reduce the spread of infection. What is the socially optimal number and price of cough medicine? $28- $24- ..... The socially optimal equilibrium occurs at a quantity of bottle(s) and a price of $ $20- $16- S $12-$11 $10 $8- $4- DA Q 16: 20 $0- 10 20 30 40arrow_forward
- Use the graph attached below as a starting point (either download it or print it out). Add curves, labels, etc. to this graph in order to show the following: 1. Show that this good has a $4/unit negative externality (external cost), such as pollution. 2. Shade the area that represents the Deadweight Loss (lost gains from trade) caused by the external cost. 3. Show a tax or subsidy wedge (whichever you think is appropriate) that will solve the problem of the external cost. 4. Show the socially optimal level of production that the Pigouvian tax or subsidy above will help the market to achieve. You may use software or pencil and paper to complete this graph. Upload it here when you are done.arrow_forward1. For each of the goods listed below, discuss whether the good is likely to entail an external cost or an external benefit. Additionally, explain if the market is likely to produce more or less than the social optimal. a. Vaccinations b. Cigarettes c. Antibiotics d. Sriracha saucearrow_forwardConsider a small town with a factory that produces cell phones. The factory's production causes air pollution, which affects the health of the residents. Draw a graph representing the market for cell phones in this town. Label the socially optimal level of output and the market equilibrium level of output. Explain the difference between the two levels.arrow_forward
- See each of the following characteristics or scenarios about externalities. Choose a correct answer whether each statement matches with the term negative externality or the term positive externality. a. Resources are overallocated. ( Positive, Negative) externality く-ー b. Gini installs a very nice front garden, raising the property values of all the other houses on her block. -- ( Positive, Negative) externality c. Market demand curves are too far to the left (too low).<-- ( Positive, Negative) externality d. Resources are underallocated. <-- ( Positive, Negative) ternality Blank # 1 Blank # 2 Blank # 3 Blank # 4arrow_forwardMatch each of the following characteristics or scenarios with either the term negative externality or the term positive externality. a. Overallocation of resources. b. Tammy installs a very nice front garden, raising the property values of all the other houses on her block. c. Market demand curves are too far to the left (too low). d. Underallocation of resources. e. Water pollution from a factory forces neighbors to buy water purifiersarrow_forwardIn what sense do positive externalities cause the so-called "invisible hand" of the marketplace to "fail"? Select one: a. Such externalities lead to government intervention in markets, which exacerbates the problems associated with externalities. Ob. Such externalities eliminate "free-riding" c. In the absence of government intervention, markets with positive externalities often fail to produce the maximur total benefit to society, as measured by total surplus. d. Markets with positive externalities produce too much of the good or service in question.arrow_forward
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