Externalities: identify Positive or Negative Identify the solution to the Externalities Calculate the cost of externalities Calculate the deadweight loss P($) 10 S 20 30 D
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- Bower likes to plant trees in his front year. His neighbors also derive pleasure form the trees in his front year. That is, Bower's trees provide a positive externality for the neighborhood. His marginal private benefit and the marginal social benefit (his and that received by his neighbors combined) are represented on the graph below, along with the marginal cost of planting a tree. Price, Cest (oll) $S0.00 45.00. 40.00 A 35.00 0 00 Margiaal Cot 25.00 20.00 15.00 argnel Soeiel Benett je 00 5.00 agnal hirde Bandfil 2 4 5 Quantity (mber of trees) Suppose the neighborhood subsidies Bower's trees. That is, neighbors give him enough money to plant the socially optimal number of trees. What area on the graph would be equal to the net social gain resulting form the subsidy? OA В Oc O A+ Bsub Generalized costs Charge 0 MPCLRT MSCLRT Automobile MSCC both Q* and Q+ neither of these are optimal Q* MPCC Generalized costs Subsidy Q 0 Light rapid transit What is the optimal traffic volume without externality considerations?If a Pigouvian tax is used to reduce carbon emissions, it must be set to be equal to1. the private marginal cost of productionb 2.The cost of the catastrophic outcomes 3. the total private cost of production 4.The marginal social cost of carbon emissions
- DN3 (a, b) The Keurig pod industry produces one cup of coffee with a constant marginal cost of $4 using a small plastic disposable pod to dispense one serving of ground coffee beans for brewing. The market demand for the Keurig pods is given by P = 22 - Q. This industry also produces excess waste in the form of the empty plastic Keurig pod. These costs are represented by the marginal external cost function, MEC = 0.2Q. a. What is the optimal (efficient) quantity of Keurig pods from a societal perspective? b. The government, concerned about the pollution problem, requires this industry to adopt a fully recyclable Keurig pod that raises the marginal cost of production to MC = $10. Given this new technology, what output level will the industry choose?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$40 million.Calculate the potential external cost for the residents in this area of building the chemical plant. Write the exact answer. Do not round.A6 A marginal abatement cost that shows a factory's pollution is represented by MAC= 360 - 5E with a tax per unit equal to 20$. How much will the factory reduce its emissions? SHOW FULL CALCULATIONS
- Price, Cost 998760 2009 201 10 1 2 3 Private Cost Social Cost Demand 6 7 8 9 10 4 5 Quantity (a) Give a definition of a negative externality and explain how it arises in a market. D (b) Refer to the graph above. If the government does not intervene in this market, what is the free market equilibrium? Is it socially efficient? Explain (c) What kind of government intervention is required in this case? Explain how it will change the market outcomDescribe the list of any known constraints imposed by the environment or by management of FreeRice project?Discuss the various ways in which low income groups may sufferrt more from environmental degredation than higher income groups. support you answer by data and valid and reliable sources
- per ogr 82.00 20.00 17.50 16.00 12.00 10.00 7.50 6.00 2.60 250 500 750 1000 120 1500 1750 Quantity of ehrimp (in kilogram) Government of Canada has introduced deficiency payment program with a target price equal to $1750 per kilogram of Shrimp, Government spending under the program is Select one Oa $12,500 Ob $22500 Oc $15,0005 Estimated U.S. taxpayer subsidies in green energy technology through 2013 are about $125 billion. Under what circumstances does the federal government need to undertake these subsidies as opposed to letting private companies themselves pay for such investments?Externalities Quantity 0 5 10 15 20 25 30 Private Marginal Cost (PMC) 25 35 40 50 120 External Cost 30 70 75 100 Social Marginal Cost (SMC) 90 85 105 140 170 Page 1 e
