b) What is the social optimum equilibrium quantity of output? c) How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome? d) (True/False) A tax of $8 per unit would enable this market to move from the equilibrium quantity of output to the socially optimal level of output. e) (True/False) Taking the external cost into account, total surplus declines when the 5th unit of output is produced and consumed. f) (True/False) If the external cost per unit of output were $0 instead of $4, then the socially efficient quantity of output would be 6 units.

b) What is the social optimum equilibrium quantity of output? c) How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome? d) (True/False) A tax of $8 per unit would enable this market to move from the equilibrium quantity of output to the socially optimal level of output. e) (True/False) Taking the external cost into account, total surplus declines when the 5th unit of output is produced and consumed. f) (True/False) If the external cost per unit of output were $0 instead of $4, then the socially efficient quantity of output would be 6 units.

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

Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
Identify the following situations as an example of a negative or a positive externality: You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds. Your neighbor paints his house a hideous color. Investments in private education raise your countrys standard of living. Trash dumped upstream flows downstream right past your home. Your roommate is a smoker, but you are a nonsmoker.
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?
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?