1. Positive externality from consumptionForgone benefit to society ofthe externality-Deadweight lossPrice $80In thousands)го005040302010MSBMarginal benef+Marginalexternal benefDMarginalbenefit10 20 30 40 60 90 700QuantityIn millionsof yearsa. Calculate the deadweight loss caused by the positive externality.b. If the government wants to solve this externality using mandated production, how much should it bec. If the government wants to solve this externality using a Pigou subsidy, how much should it be?II. Negative externality from productionPrice $0.40(per Wh0.300.25-0.300.150.10MSCMarginal costMerpinal external costMarginal cost100 200 300 400 500 600 700 800QuantityInboof kna. Calculate the deadweight loss caused by the negative externality.b. If the government wants to solve this externality using quota, how much should it be?c. If the government wants to solve this externality using a Pigou tax, how much should it be?

Positive externality:A positive externality occurs when a third party benefits from a transaction or…

Answered: 1. Positive externality from…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Answer both
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I need help with qusetion A, B and C
urco Use the chart below to answer the following question. The Socially Optimal Quantity of Pollution Select one: O a. $83 O b. $250 O c. $500 O d. $167 Marginal social cost, marginal social benefit $500 250 167 0 MSC MSB 83 125 Quantity of pollution The chart above shows the marginal social cost (MSC) and marginal social benefit (MSB) of pollution. Using the information provided in the figure, we can conclude the optimal Pigouvian tax per unit of pollution is:
Figure 1. The graph depicts the market for plastic containers. Price 16- 14- 12- 10 8- 6 200 500 650 Social Cost Private Cost Demand Quantity Refer to Figure 1. In order to reach the social optimum, the government could O offer a subsidy of $8 per unit on the production of plastic containers. O impose a tax of $8 per unit on the production of plastic containers. O offer a subsidy of $4 per unit on the production of plastic containers. O impose a tax of $4 per unit on the production of plastic containers.
45 40 35 30 25 20 P ($) Social cost Supply 15 10 Demand 5 0 0 10 20 30 40 50 60 70 80 90 100 wanted to tax or subsidize this good to achieve the Refer to the figure above. If the government socially-optimal level of output, it would Select one: O a introduce a subsidy of $10 per unit. O b. impose a tax of $10 per unit. Oo impose a tax of $15 per unit. Od introduce a subsidy of $15 per unit. 8
Figure 5-1 Price (dollars per vaccination) $60 50 40 400 600 Supply D, Refer to Figure 5-1. The market equilibrium quantity is O 200 O 400 O 600 O > 600 D₂ Quantity (thousands of vaccinations) Figure 5-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. thousand vaccinations.
11.00 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 8 1.00 300 600 900 What kind of externality is depicted above? O a. A negative production externality O b. A positive consumption externality c. A positive production externality d. A negative consumption externality Demand 1200 1500 1800 2100 Supply Marginal Social Benefit 2400
Suppose that a firm’s emissions and Marginal Abatement Cost (MAC) data are summarized in thetable below. e MAC 0 200 10 180 20 160 30 140 40 120 50 100 60 80 70 60 80 40 90 20 100 0 a. If the price of a pollution permit is $100, how many permits will the firm need? Explain.b. Suppose that the price of a pollution permit increases to $120, how many permits will thefirm need? Explain.c. With this new price of $120, will the firm’s emissions increase or decrease? By howmuch? Explain.d. Can the firm sell any permits? If so, what is the revenue generated from permit sales?Explain.
A positive externality will cause a market to produce Select one: more than is socially desirable. O b. more than the same market would produce in the presence of a negative externality. O c. less than is socially desirable. O d. the socially optimal equilibrium amount. a.
D1
10. Understanding different policy options to correct for negativeexternalities Carbon dioxide emissions have been linked to degradation of air quality. The following table lists some potential regulations targeting the amount of airbome carbon dioxide. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. о Public Policy Command-and- Control Policy Tradable Permit System Corrective Subsidy Corrective Тах Trees take carbon dioxide out of the air and convert it to oxygen, so the govemment funds a tree-planting initiative by offering $440 to any citizen who plants a tree. 0 о The government charges factories $440 for every ton of carbon dioxide they emit о о The government orders every factory to adopt a new technology, which reduces carbon-dioxide emissions into the atmosphere. 0 ° ° о The government limits total carbon-dioxide emissions by all factories to 260,000 tons per ten years. Each…

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