The diagram to the right illustrates the market for outdoor concert tickets in a park in the middle of a residential area in aparticular town. Ticket prices are measured in dollars (the grid is drawn for $2.50 increments) and ticket quantities aremeasured in thousands. The locals are not happy about the increased traffic congestion and noise that accompany eachconcert. Note that supply curve S, represents the marginal private cost of the concerts. What is the cost of the externality$55-$50-$45-per concert ticket?$40-.....The cost of the externality is $per concert ticket sold.$35-(Round to the nearest cent as needed.)$30.00$30+$25-$20.00$20-........$15-$10-$5-1015$0-10152030Q of Tickets (Thousands)25P......

This is an example of negative externality where a part of society who is not involved in production…

Answered: The diagram to the right illustrates…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section10.1: Externalities And Market Inefficiency

Problem 1QQ

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Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Introduce emission taxes Offer a subsidy to consumers equal to the vertical distance between the marginal private benefit curve and the marginal social benefit curve Implement tradable pollution permits Offer a subsidy equal to the price at the efficient outcome Offer a subsidy to producers equal to the vertical distance between the marginal private benefit curve and marginal social benefit curve
Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.
Suppose that there is an unregulated market for pesticides. When the factories produce pesticide, they also create waste that they dump into a lake on the outskirts of town. The market for pesticides is given by the following equations (note that Q is in tons, and P is in 1000s of dollars: Demand: P = 8 – Q Supply: P = Q Marginal Social Cost: P = 2 + Q Now suppose the government levies a pollution tax. What is the tax per ton of pesticide that will achieve the socially efficient outcome? If the production of pesticides at any level produces pollution, why is the socially optimal quantity not zero?
Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity. (?) Supply (Private Cost) Market Equilibrium Socially Optimal Level Social Value Demand (Private Value) QUANTITY OF PARKS PRICE OF PARKS
2. Given the demand function of motorcycle: Q = 500 – 100P where Q is total quantity demanded (unit: 10,000) and P is daily price (in unit of US$). (1) If the current daily price is US$1.0, please find the total quantity demanded. (2) If the external costs of motorcycle ($2) are all internalized, what would be the total quantity demanded? (3) Please also discuss impacts of this internalization policy on supply, demand and public infrastructures.
Does it make sense that accounting for the negative externality results in a higher price? Explain your answer. Does it make sense that accounting for the negative externality results in a lower quantity? Explain your answer.
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
Use the following diagram of the market for product X to answer the question below. Price Q₁ Qo Q₂ Quantity D₁ Curve S, embodies all costs (including externalities) and D, embodies all benefits (including externalities) associated with the production and consumption of X. Assuming the market equilibrium output is Q₁, we can conclude that the existence of external A) costs has resulted in an underallocation of resources to X. B) costs has resulted in an overallocation of resources to X. C) benefits has resulted in an overallocation of resources to X. D) benefits has resulted in an underallocation of resources to X.
Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? If there is an external benefit of $3, what is the efficient quantity? For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the market is perfectly competitive and that "one allowance" lets you…
Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? If there is an external benefit of $3, what is the efficient quantity? For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the market is perfectly competitive and that "one allowance" lets you…
Viral infections such as flu are highly contagious. The number of infections and thus the spread of the disease can be prevented by getting vaccinated. However, the decision to take vaccine is voluntary and some people choose not to go for it for various reasons.] [What type of externality occurs by getting vaccinated against contagious diseases? Explain your answer in 100 words or less. [In a diagram, show the market equilibrium quantity of the vaccine. Is the quantity also socially efficient? Explain in 100 words or less and demonstrate using the same diagram. [Suggest one method to achieve a socially efficient outcome. Explain your answer in 100 or less words.
The Cemex plant in Davenport produced cement. The production of cement created dust which traveled through the air and landed on the nearby area. Testing at an elementary school and fire department near the plant showed toxic levels of Chromium 6 resulting from the dust. Using the concept of externalities and the graph below, explain what kind of externality this event created and the effects this had on economic efficiency. Be sure to indicate any differences between market price and quantity for cement and the efficient price and quantity.

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