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- There are three industrial firms in a town Firm Initial Pollution Level Cost of Reducing Pollution by 1 Unit A 30 units $20 40 units 20 units B с $30 $10 The government wants to reduce pollution to 60 units, so it gives each firm 20 tradable pollution permits. 1. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation? 2. How much higher would the costs of pollution reduction be if the permits could not be traded?Economics 1. Social Benefit and Social Cost For the following statements: (1) identify if there is an externality or not; If yes, (2) classify them as: positive or negative; (3) If the externality happens during the consumption or production of the good; and, finally, (4) draw a graph with the marginal private and social benefit and the marginal private and social cost. (a) Driving a non-electric-car generates carbon dioxide emissions. (b) Getting a good education improves your productivity. (c) Developing open-source software makes new tools available for developers. (d) A Youtuber makes loud noises in the middle of the night while recording videos. (e) A person is blasting music on the subway.1. Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good. ? PRICE (Dollars per unit) QUANTITY (Units) Supply Demand Demand Supply With this type of…
- D. Pollution problem You know the marginal cost of reducing pollution for four factories. Each unit of pollution can be eliminated according to the following marginal costs. A B C D First Unit $65 $15 $30 $10 Second Unit $75 $55 $65 $30 Third Unit $85 $85 $110 $40 Fourth Unit $120 $155 $120 $60 1. The total cost of Firm D eliminating 4 units of pollution 2. Determine the total cost of each firm eliminating one unit of production. 3. The community has decided that the managers of the firms are allowed to produce a total of 4 units of production. Identify the firm(s) that will pollute.#8. A party ends up spreading the coronavirus. Is that an externality? a. Yes, it is a negative externality b. Yes, it is a positive externality c. No, it is not an externality2
- Price 30 MC 23 20 15 ATC 12 D 9 12 15 MR Quantity c) If this firm is operated as a competitive market, what would be the output and price? Why are these output and price socially efficient?Society's Production-Possibilities Frontier Quantity of Guns 987 65 4 3 2 1 0 D B C A 0 20 40 60 80 100 120 Quantity of Butter In the graph above, which point represents an inefficient combination of guns and butter? O a. B O b. C C. A d. DChapter 9 Problem 6: The figure below illustrates the market for cycles in a country. IPrice 38 36 34 Domestic Supply 26 24 22 20 18t 16t 14t 12t World price 10 Domeetic Demand Quantity 600 520 560 440 480 400 280 320 360 240 80 120 160 200 40 Without trade, cons umer surplus amounts to what amount? a. Without trade, producer surplus amounts to what amount? b. Without trade, total surplus amounts to what amount? c. With trade, the price of tricycles in this country is at what price and what amount? d. With trade, consumer surplus is how much? e. With trade, producer surplus is how much? f. With trade, total surplus is how much? g.