An external cost is illustrated in the figure, with the two upward-sloping lines reflecting private and social marginal costs. When the government intervenes to correct for the external cost, output will from to Price per unit O fall W: R O increase: W: R O fall: W:0 O fall R; W Quantity (per period)

An external cost is illustrated in the figure, with the two upward-sloping lines reflecting private and social marginal costs. When the government intervenes to correct for the external cost, output will from to Price per unit O fall W: R O increase: W: R O fall: W:0 O fall R; W Quantity (per period)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter13: Positive Externalities And Public Goods

Section: Chapter Questions

Problem 23P: HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow...

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D. England coastal community is given by MSB = 40 – 1.5*q, and the marginal cost is MSC = 0.5*q; where q is thousand tons of fish harvested in the current year, and MSB and MSC are measured in million dollars. Assume overfishing will reduce the productivity and the fishery and specifically each thousand tons of fish harvested this year will reduce the present value of future benefits by 4 million dollars, that is the marginal user cost MUC = 4. Determine the quantity of output that achieves static efficiency. Determine the quantity of output that achieves dynamic efficiency. The marginal social benefits generated from commercial fishing in an New %3D a. b.
Define (a) externalities and (b) sunk costs, andthen give examples of each that might be involvedin a proposal by an energy company to build anew coal-fired electric power generating unit. Howwould these factors be worked into the analysis?
n order to create more jobs in the region, the local government gave permission to a foreign investor to build a chemical plant not far from a residential area. Analysts predict that real estate prices will drop by 15%15%. Currently, the total value of real estate is $40$⁢40 million.Calculate the potential external cost for the residents in this area of building the chemical plant. Write the exact answer. Do not round.
For a firm, its labor costs are OA. an external cost. B. a private cost. C. a marginal benefit. OD. Both answers A and C are correct. OE. Both answers A and B are correct.
b) Discuss and explain the concept of positive return toscale showing it relationship with the quantity ofproduction.
The private Marginal benefits for cassava is given by 30-3X where X is the number of cassava consumed. Private marginal cost of producing cassava is the same as 15 shillings. for each cassava produced, external cost of ksh. 6 is imposed on members of Nairobi village. Without government interventon, how much of cassava is produced? What is efficient level of cassava production what is the gain to society involved moving from inefficient to effeicient level of production and if pigouvian ta is introduced, how much tax revenue will be raised?
Suppose the government, as part of its fight against COVID, allows restaurants to open but requires customers to be socially distanced, reducing the number of tables and the maximum number of customers who can be served a. Give an example of a fixed cost associated with running a restaurant? b What costs would you expect to be part of the extra cost asSsociated with serving one more diner in the restaurant? c. How would you expect the social distancing policy to affect the marginal and average cost.of serving a meal? You might find drawing a diagram helpful. d. How would you expect the social distancing policy to affect the price charged fona restaurant meal? You might find drawing a diagram helpful. e What would you expect to be the effect of the sccial distancino policy on entry and extinthe restaurant sector? You might fino drawing.a diagram helpful.
FIGURE 9.10 Price MSC MSB MPB а, о, о, о, Quantity per period Refer to Figure 9.10 to answer this question. Which of the following statements is true if external costs are recognized but external benefits are not? OA) The price would be P₁. B) The price would be P₂. MPC OC) The price would be P3. O D) The price would be P4.
Consider the following graph that shows the marginal abatement cost (MAC) curve for a coal power plan for reducing local air pollution and the marginal damage (MD) curve for those living around the coal power plant. MD (E) MAC (E b. Emissions E-0 E EL E-Max AMax Or Abatement E A-0 What are the total abatement costs at E' (enter your answer with the letters and "+" signs as "a+b+c+d+e+f", without the quotation marks. What are the total abatement costs at E-0 (enter your answer with the letters and "+" signs as as "a+b+c+d+c+f", without the quotation marks. If the property rights were with the coal power plant how much Emissions would we see? (enter one of the following, "E-0", "E", "E1", "E-Max") If the property rights were with the people how much Emissions would we see? (enter one of the following. "E-0", "E", "E1 "E-Max") What is the socially optimal level of emissions (choose from one of the following and enter as written without the quotation marks, "E-0". "E"E1 "E-Max").
25. Suppose that there is a large farm and a large recreation firm located on a river. The farm is upstream of the recreational area. The farm uses the streamflow for irrigation. Let S be the amount of streamflow used by the farm and suppose its marginal benefit for irrigation is given by MB-5000-15S. Use of streamflow by the farm is costly to the recreational firm, though, because of lost opportunities for boating, fishing, and camping. Suppose this marginal cost is given by MC=5s. (a) Draw a sketch of the MB and MC curves for use of S by the farm. On your graph, show the efficient level of S by the farm. Solve for this amount from the equations. (b) If unregulated, the farm uses streamflow at a price of zero. Show on your graph what S this corresponds to. Solve for it from the equations. (c) If the government sets a tax price on streamflow, what tax price per unit of S will result in the farm using the efficient level of streamflow? Show on your graph and find with the equations. (d)…
Computer models of global climate changecaused by increasing carbon dioxide in the atmosphere predictnot only higher overall temperatures, but also more intense andfrequent heat waves. During the devastating European heatwave in the summer of 2003, between 35,000 and 52,000“excess deaths” occurred. Before taking specific actions toreduce carbon dioxide emissions, economists and politicians tryto estimate the costs. Should excess deaths be included as acost of inaction? If so, what value should we place on a life?
The initial allocation of tradable discharge permits determines whether or not an efficient abatement cost allocation is achieved can have potentially large effects on the welfare of individual polluters OC. is something that individual polluters care nothing about od. has neither efficiency nor equity implications