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- Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.An increase in globalization has lead to an increase in pollution, and this is a problem because pollution is seen to be the classic example of a This is a that individuals impose on others but do not pay for. O negative externality, cost O possitive externality, benefit O negative externality, benefit O possitive externality, cost
- An externality occurs whenever O private costs plus internal costs equal social costs. private costs diverge from social costs. O private costs are the same as internal costs. O private costs are the same as social costs.Time left 0:53:28 Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced? tion 10 et rered ed out of Select one: ag stion O a. No relationship exists. O b. The equilibrium quantity is less than the socially optimal quantity. O c. The equilibrium quantity is greater than the socially optimal quantity. O d. They are equal. Next page revious page ser tour on this page KTWhich statement about externalities is wrong? O Markets are typically not efficient in dealing with externalities O Externalities can be positive or negative O A firm naturally takes into account negative externalities that result from their production O Interventions such as carbon taxes can help correct externalities gative externalities imply that the social cost is high than the internal (or private) cost
- A steelmaking plant pollutes the air and water so % 5 O A. the marginal private cost of producing steel minus the marginal social cost equals the marginal external cost O B. the marginal private cost of producing steel equals the marginal external cost plus the marginal social cost OC. the marginal social cost of producing steel exceeds the marginal private cost by the amount of the marginal external cost O D. the marginal social cost of producing steel is less than the marginal private cost by the amount of the marginal external cost t 6 Oll y 887 7 O U * 8 19 ( O ✓ p T Next AElectricity has a negative production externality because O A. the marginal private cost of producing it increases as more of it is produced OB. its marginal benefit decreases as more of it is consumed O c. a marginal external cost lowers the marginal benefit from consuming it O D. the marginal social cost of producing it exceeds the marginal private cost of producing itA positive externality exists when O marginal social costs are less than marginal private costs. O marginal social costs are greater than marginal private costs. O marginal social benefits are less than marginal private benefits. O marginal social benefits are greater than marginal private benefits. O a and d
- The following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. Price of high tmissiens velides Sorial Value &, Quantity of high imissions vehidles What is the social cost of the last unit traded in the market? O P1 O P2 O P3 OP4 O OO0Time left 0:27:07 Suppose that flu shots create a positive externality equal to $12 per shot. What is the relationship between the equilibrium quantity and the socially optimal quantity of flu shots produced? Select one: The equilibrium quantity is less than the socially optimal quantity. O a. O b. The equilibrium quantity is greater than the socially optimal quantity. Oc. They are equal. O d. No relationship exists. Next page 26°C Mostly cloudy tour on this page Type here to searchWhen U.S. farmers in the Southwest irigate their land, salt in the ground sol leaks into the Colorado River The Colorado River has become so salty that Mexican farmers further down the tiver cannot irrigate their own land and Mexican crops have been devastated, This situation constitutes n negative externality because:O. a) Us.famers consider only their private costs in their decision makingO. b) US. farmers consider only their external costs in their decision makingO. c) Mexican farmers consider only their private costs in their decision makingO. d) the social cost of irrigation exceed s the social benefits U.s. famers were to Internalize this externality. US, famers would irrigate_______as the_____