DemandBAQuantityRefer to Externality graph above. Point A is the current equilibrium level of output of thisproduct and point B is the socially optimal level of output for the society. S is the supplycurve that includes private costs. St is the supply curve that includes public costs. The graphindicates that there is (arc):O a. positive externalities from product production.O b. spillover costs from the production of this product.Oc. spillover benefits to the production of this product.O d. an underallocation of resources to product production.Price%24

In the presence of externalities, there will be spillover cost or benefit to 3rd party who is not…

Demand BA Quantity Refer to Externality graph above. Point A is the current equilibrium level of output of t product and point B is the socially optimal level of output for the society.S is the supply curve that includes private costs. St is the supply curve that includes public costs. The gra indicates that there is (are): O a. positive extermalities from product production. O b. spillover costs from the production of this product. Oc spillover benefits to the production of this product. O d. an underallocation of resources to product production.

Demand BA Quantity Refer to Externality graph above. Point A is the current equilibrium level of output of t product and point B is the socially optimal level of output for the society.S is the supply curve that includes private costs. St is the supply curve that includes public costs. The gra indicates that there is (are): O a. positive extermalities from product production. O b. spillover costs from the production of this product. Oc spillover benefits to the production of this product. O d. an underallocation of resources to product production.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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what kind of externality is produced in the market illustratef in the diagram below?
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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
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Figure 17.2) Suppose the external marginal cost is constant at $5 per unit. Price (demand) equals social marginal cost at output level: Select one: a. 7 b. 3 c. 6 d. 4 Price (S) 14 12 10 00 8 6 4 2 -N G 8 o 10 S = MC 12 14 Quantity
Suppose the equation for the demand curve in a market is P=100 – 2Q. Also, suppose the equation for the supply curve in the same market is P=10+3Q. Suppose there is an external cost of $20 associated with the production of each unit of the good. The socially optimal price is $8 greater than the market equilibrium price. O $12 smaller than the market equilibrium price. O $8 smaller than the market equilibrium price. O $12 greater than the market equilibrium price.
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Which statement about externalities is wrong? O Markets are typically not efficient in dealing with externalities O Externalities can be positive or negative O A firm naturally takes into account negative externalities that result from their production O Interventions such as carbon taxes can help correct externalities gative externalities imply that the social cost is high than the internal (or private) cost
500 450 The graph on the right may help in answering question 25 400 350 300 250 200 150 100 50 O 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Quantity Demand MC Exter nality MC private MC Social A competitive tire manufacturing industry spews emissions into the air at47 per tire a marginal cost of 1.5-q, where q is the quantity of tires produced per month (in thousands). The industry marginal cost, excluding the cost of emissions (private marginal cost), is 4 + 4•q, expressed in $ per tire. The inverse demand curve for tires is p = 480 - 3-q, also expressed in $ per tire. In order to achieve the socially efficient level of tire production, which takes into account the optimal level of air pollution, the government levies a tax on the industry. What is the efficient pollution tax? $84 per tire $101 per tire $152 per tire Price
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