An efficient government subsidy provided in cases of positive production externality, is set equal to the goods: 1) Marginal social benefit 2) Price at which MSC = MSB 3) Marginal external cost 4) Marginal external benefit

An efficient government subsidy provided in cases of positive production externality, is set equal to the goods: 1) Marginal social benefit 2) Price at which MSC = MSB 3) Marginal external cost 4) Marginal external benefit

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 1.1P

See similar textbooks

Related questions

Q: Ceteris paribus, goods with "positive externalities" tend to be developed economies these goods are…

A: Let us define some important terms: Externality: The effect of market exchange on a third party…

Q: Large taxes on energy companies whose production activities cause environmental damage (assume a…

A: Answer: Negative externality: When the production or consumption of a good causes a negative impact…

Q: in long-ru

A: Pareto efficiency is when an economy has its goods and resources being allocated to the maximum…

Q: Each of the following is true of a positive externality except The quantity after a corrective…

A: The false statement or exception is “the quantity after a corrective subsidy is less than the…

Q: An externality has marginal benefits MB = 24 - 2q, marginal social benefits MSB = 24 - q and…

A: A positive externality occurs when the production and consumption of a good / service benefits a…

Q: Market Supply is given by P=2Q and Market Demand is given by P=189-2Q. Each extra produced creates a…

A: We are going to find the New equilibrium under Pigouvian taxes and effective consumer surplus to…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=3P and Market Demand…

A: Negative externality is negative spillover effects on third party or on society.

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=3P and Market Demand…

A: Answer in Step 2

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=9P and Market Demand…

A: The total production process of a firm is an amalgamation of various costs, the optimum quantity…

Q: Despite the logic of the Coase theorem, private actors often fail to resolve the problems caused by…

A: Externalities refer to the cost or benefit of an economic transaction incurred on a third party who…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=2P and Market Demand…

A: Perfect competitive market where large numbers of buyers and sellers exchange homogeneous product.…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=4P and Market Demand…

A: In economics, efficiency means that improving one party's situation without imposing a cost on…

Q: ____________ includes both the private costs incurred by firms and also the (external) costs…

A: Private cost is the cost incurred by the firm on the production of goods. This cost includes the…

Q: The people of Chingola district a town in the Copperbelt province of Zambia are concerned over the…

A: Externality means spillover effect of economic activities motivated by profit or satisfaction on…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=8P and Market Demand…

A: Demand function is Q = 422 - 3P The supply function Q = 8P when market in equilibrium demand and…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=5P and Market Demand…

A: Supply function Q=5P P = Q/5 MPC = Q/5 , where MPC = Marginal private costs Market Demand is given…

Q: ced i

A: Given : Supply : Q=4P Demand : Q=296-2P Negative Externality = $5 (assumed)

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=2P and Market Demand…

A: Supply is the quantity that a producer or seller manufacture to sell in the market for consumption…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=3P and Market Demand…

Q: The Coase theorem does NOT apply if a. There is a significant externality between two parties. b.…

A: The externality is when the action of one individual affect the welfare of other individual who does…

Q: With rental rates exceeding $3,000 per square foot per year, retail space in Causeway Bay, Hong…

A: Town planning is an important aspect of urbanization. Unchecked heights of building and higher…

Q: Which of the following would be considered a negative externality? Question 7 options: You are…

A: Answer: Coke is considering a new line of lite beverages. If Coke goes ahead with this investment,…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=8P and Market Demand…

A: Externality refers to positive or negative effect of good on third party who is neither a consumer…

Q: Provide examples of public goods or externalities that are provided successfully by market or…

A: Public goods are defined as goods that are non-rival and non-excludable in nature.

Q: Market imperfections abound in Canada, brought about by externatilities. If there are external…

A: Imperfection in a market refers to the situation when there the market is operated at an inefficient…

Q: The government is considering setting up a public health program to cull birds to prevent the spread…

A: The word marginal in Economics refer to additional. Here the word "marginal social benefit" refers…

Q: Which of the following is NOT a possible way of solving an externality problem of electricity…

A: A negative externality refers to negative spillover effects on the third party or on the society.

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=6P and Market Demand…

A: GIVEN The market for plasticans is perfectly competitive. Market Supply is given by Q = 6P…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=3P and Market Demand…

A: Surplus is based on economic theory of marginal utility which defines additional satisfaction or…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=7P and Market Demand…

A: Market Supply is given by,Q=7Pand Market Demand is given by,Q=455-2Pand, negative…

Q: explain why the positive externality associated with the production of a pure public good implies…

A: Externalities are side effects which are borne by the third parties. Externalities could be…

Q: it is microeconomics If a firm does not pay for an external cost, who does? Why might there be…

A: If a firm does not pay for an external cost, who does? Answer External costs are the cost, which is…

Q: When a corrective tax is created so that it equals the external costs linked to the production of a…

A: A corrective tax is an instrument used by the government to address market failure. Taxes increase…

Q: Which of the following statements about a market that is aftected by a positive externality is…

A: Externalities refer to the costs or benefits of an economic transaction incurred by a third party…

Q: Large taxes on energy companies whose production activities cause environmental damage (assume a…

A: Negative Externality: The term negative externality refers to the situation where the production…

Q: Suppose the production of widgets causes a negative externality of $12 per unit. The current market…

A: A tax is a unilateral payment that the people pays towards the government for various purposes such…

Q: Assume that the marginal benehts to society of higher education are greater than the marginal…

A: A subsidy should be given to the consumer equal to the marginal external cost to achieve social…

Q: Each of the following is true of a positive externality except Internalizing the externality causes…

A: The false statement or exception is “the quantity after a corrective subsidy is less than the…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=6P and Market Demand…

A: Given, The market for plasticans is perfectly competitive. Market Supply is given by Q = 6P Market…

Q: The market for plasticans is perfectly competitive. Market Supply is given by Q=5P and Market Demand…

A: Market Supply is given by, Q=5P and Market Demand is given by, Q=373-3P and, positive…

Q: Marginal social costs (MSC) will be equal to marginal private costs (MPC) when marginal external…

A: Marginal social cost(MSC) is defined as cost paid by the producer along with the external cost.

Q: When an economy and government face negative externality, describe the cause of this problem and…

A: Meaning of Externalities: The term externality refers to the situation where the cost is incurred…

Question

100%

An efficient government subsidy provided in cases of positive production externality, is
set equal to the goods:

1) Marginal social benefit

2) Price at which MSC = MSB

3) Marginal external cost

4) Marginal external benefit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1- Introduction

VIEW

Step 2- Explanation

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Property Rights, Bargaining And The Coase Theorem

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
Suppose that supply and demand for vaccines can be represented by P = 100 + 3Q and P = 500-Q, respectively. Further, assume that each vaccination is associated with a positive externality, with an estimated value of 100 monetary units. a. What is the competitive equilibrium in this market? Q = 100 and P = 400 O Q = 125 and P = 375 Q 125 and P = 475 Q = 75 and P = 425 None of the others Calculator Regarding the socially efficient outcome, which of the following is correct? MCSocial QOpt = 125 since this is the value for which MB Social QOpt = 125 and the total value of the externality is 100 O QOpt = 100 since the deadweight loss is equal to 0 O QOpt=75 and the total value of the externality is 7500 None of the others b.
Generalized costs Charge- MPCLRT=MSCLRT MSCC Q* Q1 0 MPCC Automobile Light rapid transit What is the optimal traffic volume with externality considerations? Q+ both Q* and Q+ neither of these are optimal Generalized costs Subsidy
The terms spillover or externality refer to__A) black-market economic activity.B) the impact on markets of imported goods.c) the cost or benefit of a market activity borne by a third party.D) the inequitable distribution of income.
Provide examples of public goods or externalities that are provided successfully by market or contractual arrangements.
(a) Explain what is meant by the term "negative externality" in production
The market for plasticans is perfectly competitive. Market Supply is givenby Q=3P and Market Demand is given by Q=321-2P. Each extra unit ofplastican produced imposes a negative externality of $7. What is the(absolute value of) Deadweight Loss due to the externality?
Analyze the relationship between negative externalities and inefficient overproduction
Consider a market where the demand curve is given by P = 190 – 0.2Q and the supply curve is given by P = 41 + 0.1Q. Production of this good generates an external cost as measured by the marginal external cost function MEC = 0.1Q. If the government wants to encourage firms to produce at the socially efficient level of output then how large should the per unit tax be? Enter a number rounded to two decimal places as necessary
Explain how subsidies provided by the government to producers solve their externalities
In theory, the Pigouvian tax... Group of answer choices revenue should be spent on mitigating the damage caused by the negative externality. requires the introduction of an additional policy such as an information-based policy so people know about the tax. is a sufficient and complete solution to a negative externality type environmental problem.
Figure 10-17 P P Price S Beternal Cost Quantity Refer to Figure 10-17. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome? An amount equal to P An amount equal to the external cost. An amount equal to P' minus P. An amount equal to P.