The annual private supply and demand for cars in the United States is given in the figure below. Price (S) 50,000 45,000 40,000 35,000 MC pvt MC social Tools DWL •:g 30,000 25,000 MB 20,000 15,000 10,000 5,000 0 4 4 8 12 16 20 24 28 32 36 40 Millions of cars a. Suppose driving a car causes a $7,500/car external cost on nondrivers. Draw the social benefit curve that accounts for the external cost associated with driving. Instructions: Use the tool provided (MBsocial) and plot only the endpoints over the range 0-32 b. The efficient number of cars is [ million cars. If the government does not intervene in this market. [ million cars (Click to select) are purchased. c. Draw the deadweight loss that occurs in this market if there is no government intervention. Instructions: Use the tool provided (DWL) to draw the deadweight loss.

The annual private supply and demand for cars in the United States is given in the figure below. Price (S) 50,000 45,000 40,000 35,000 MC pvt MC social Tools DWL •:g 30,000 25,000 MB 20,000 15,000 10,000 5,000 0 4 4 8 12 16 20 24 28 32 36 40 Millions of cars a. Suppose driving a car causes a $7,500/car external cost on nondrivers. Draw the social benefit curve that accounts for the external cost associated with driving. Instructions: Use the tool provided (MBsocial) and plot only the endpoints over the range 0-32 b. The efficient number of cars is [ million cars. If the government does not intervene in this market. [ million cars (Click to select) are purchased. c. Draw the deadweight loss that occurs in this market if there is no government intervention. Instructions: Use the tool provided (DWL) to draw the deadweight loss.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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