The table below shows hypothetical demand and supply schedules tor cigarėttes in the absence of government intervention. a. Draw a diagram showing demand (Do), supply (S,), and equilibrium price and quantity in the market before government intervention. b. Government policy-makers estimate that the spillover costs associated with cigarette smoking are an extra $2 for each pack sold. Outline the nature of these spillover costs in the case of cigarette smoking. c. Using the estimate from part b, draw a new supply curve (S,) on your graph that incorporates both private and public costs of producing and consuming

The following graphs illustrate how positive externalities can be generated by both the production (supply) and consumption (demand) of the vaccine. Dead Weight Loss Supply Marginal Cost P Market Social Quantity Optimum D2 Marginal Social Benefit Positive Externality D₁- Marginal Private Benefit ■FIGURE 5-4 Price of Marginal benefit, MB Underproduction S-PMC SMC = PMC-MB -Deadweight loss D= PMB = SMB Market Failure Due to Positive Production Externality in the Oil Exploration Market Expenditures on oil exploration by any company have a positive externality because they offer more profitable opportuni- ties for other companies. This leads to a social marginal cost that is below the private marginal cost, and a social optimum quantity (Q₂) that is greater than the competitive market equilibri um quantity (Q). There is underpro- duction of Q-Q, with an associated deadweight loss of area ABC. Quantity of oil Positive Externality- Demand Please review the following on the foundations of…

This is from my microeconomics class, Mankiw Chapter 12. It is one question broken up into two parts.   1) A Culinary Conundrum   Assume that Georgetown University President John DeGioia is interested in encouraging healthier eating habits on the part of Georgetownstudents.  Assume further that Georgetown Students have two options for their meals: they can eat in the cafeteria on campus or at one of the fancy restaurants in the surrounding neighborhood.  Meals on campus are healthier than most off-campus options, so President DeGioia would like to encourage students to eat on campus more often. However, students think it’s fun to go off campus for their meals when they can afford to do so.  Thus,you should consider on-campus meals to be inferior good standoff-campus meals to be normal goods. a.) True, false, or uncertain: if President De Gioia orders the cafeteria to lower the price of its meals, students will eat on campus more often. Explain your answer. b.) True, false, or…

What would likely be the impact on health care costs if a government implements price controls on pharmaceuticals? A. Health care costs would increase due to higher administrative overhead. B. Health care costs would decrease as drug prices are directly reduced. C. Health care costs would remain unchanged, as other expenses would rise to offset drug cost savings. D. Health care costs would initially decrease but eventually lead to shortages and higher costs in the long term.