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

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Figure 10-12 Price External benefit Supply Line 2 Line 1 21 2₂ Quantity Refer to Figure 10-12. Which of the following is an appropriate label for Line 2? a. private cost b. private value c. social value d. social cost
a. The socially optimal level of production is ____units. b. But, the market will end up producing ____units a. The socially optimal level of production is how many units? b. The market will end up producing how many units?
Time 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 search
Examples of transaction costs include (check all that apply): A. the cost of the externality. B. the difference between the private costs and social costs of production. C. the time required to negotiate an agreement. D. the cost of drafting a contract or agreement. E. the cost of monitoring an agreement. O O O O O
2 The market for education confers positive externalities on society. Which of the following is an example of a positive externality that it provides? Higher quality of public institutions like government and law Subsidies for providing education Higher salary for the person earning a degree More colleges and universities X OOOO W F2 3 16 80 F3 E 888 FA R DE F % V T MacBook Air 6 Y B & 7 H tv NA 2 N 8 K M 0 W Aa zoom 0
0.90 0.85 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 50 100 150 200 250 300 What kind of externality is in the market above? O a. negative production externality O b. positive consumption externality O c. negative consumption externality O d. positive production externality Demand 350 Supply MSB 400
Explain the "Externalities theory" in general Explain the concept of "social marginal cost" Give one clear example of production externality and its influence on the "social marginal cost".
Only typed answer You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 3Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 14Q. Instruction: Round your answers to the nearest two decimal places. a. What is the socially efficient level of output? units b. Given these costs and market demand, how much output would a competitive industry produce? units c. Given these costs and market demand, how much output would a monopolist produce? units d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output. Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit. Pollution taxes…
Supply 10.00 9.00 8.00 7.00 6.00 MSC 5.00 4.00 Demand 3.00 2.00 1.00 25000 50000 75000 100000 125000 150000 175000 200000 If a tax or subsidy were used to correct the externality, what would be chosen? O a. tax = $4 O b. subsidy = $3 O C. tax = $3 O d. subsidy = $4 B.
Mn5.
According to economists what is the optimal amount of pollution? O a. The optimal amount of pollution is where private costs equal social costs O b. Pollution should be reduced to a level as determined by government regulation O c. None, the goal is to completely eliminate pollution d. The point where the marginal benefit from further pollution reduction equals the marginal cost of further reduction

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