The market equilibrium quantity is units of pharmaceuticals, but the socially optimal quantity of pharmaceuticals production is units. To create an incentive for the firm to produce the socially optimal quantity of pharmaceuticals, the government could impose a per unit of pharmaceuticals. of

Suppose an environmental impact study showsthat the coral reef near Port Douglas, Australia,can sustain 20 scuba diving tours per week. Discuss the pros and cons of setting a quota of 20 divetours per week

The figure below shows the market for higher education. The market demand curve for higher education reflects only the marginal private benefit (MPB) that individuals receive. Since this is a market with positive externalities, suppose the government provides a subsidy to consumers of higher education (students) that is equal to the marginal social benefit (MSB) minus the marginal private benefit (MPB), in this case, $8, 000 per student. With the subsidy, the demand curve will shift and become the same as the marginal social benefit (MSB) curve. Move the demand curve below to illustrate this shift. Be sure to take the exact size of the subsidy into account. Precise answers are required. Provide your answer below: 18 16 14 S(MPC) 10 -8 O Market Equilibrium (800,8) Social Equilibrium (800,8) -6 -4- 2- D(MPB) 16001800 1000 1200 Quantity (in thousands of college degrees) -200 0 200 400 600 800 1400 -2 Price (in thousands of $)

options for blank three drop down: efficient allocation OR over-provision OR under-provision