Which of these activities will most likely impose an external cost? A. An athlete works out at a gym. B. A postal worker smokes a cigarette in a crowded break room. C. A young father pushes his baby in a stroller. D. A construction worker eats a hotdog during her lunch break.
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- Which of the following is an example of an externality? (x) cigarette smoke that permeates an entire restaurant (y) a flu shot that prevents a student from transmitting the virus to her roommate (z) a beautiful flower garden outside of the local post office Select one or more: a. (x), (y) and (z) b. (x) and (y) only c. (x) and (z) only d. (y) and (z) only e. (y) onlySoybeans are produced and sold in a perfectly competitive market. The fertilizers used in soybean production generate a negative externality by seeping liquid contaminants into local rivers. (a) Draw a correctly labeled graph of the soybean market, and show each of the following. (i) The marginal private cost, labeled MPC (ii) The marginal social cost, labeled MSC (iii) The marginal social benefit, labeled MSB (iv) The market equilibrium quantity, labeled QC (v) The socially optimal quantity, labeled QS (vi) The area of the deadweight loss, shaded completely (b) Assume the government sets a binding price floor such that the quantity demanded in the market is between QS and QC. (i) What will happen to the quantity produced? (ii) Will the price floor reduce the deadweight loss? Explain. (c) Assume instead of a price floor, the government decides to impose a lump-sum tax. What will happen to the socially optimal quantity? Explain. (d) Assume instead of a lump-sum tax, the government…Which of the following is an example of an activity that creates an external cost? i. a smoker emitting second-hand smoke ii. sulfur emitting from a smoke stack iii. throwing garbage on the roadside Oi only ii and iii iii only i and ii i, ii, and iii
- the addition to a company's plant is for the purpose of producing a new product is an example of Select one: a. oppurtunity cost b. sunk cost c. cannibalization d. externalityIf production of a good is known to create external benefits a. Those benefits are larger than those received by the consumers of that good b. Those benefits are smaller than those received by the consumers of that good c. Those benefits are the same as those received by the consumers of that goodAn externality is the impact of: a. None of the answers is correct. b. one person’s actions on the well-being of another person c. a person’s actions on his well-being.
- Does the following activity or event create an extemality? If it does, is it an external benefit or external cost and does it arise from production or consumption? An increase in the number of people who are studying for graduate degrees creates A person who wears strong perfume to class creates, Airplanes taking off from LaGuardia Airport during the US. Open tennis tournament nearby create A sunset over the Pacific Ocean creates OA. an external cost arising from production; no externality B. an external benefit arising from consumption; an external benefit arising from consumption OC. an external cost arising from consumption; no externality D. an external benefit arising from production; an external benefit arising from consumption OA. an external benefit arising from production; an external cost arising from production оооо B. an external cost arising from consumption; an external benefit arising from consumption OC. an external cost arising from production; an external benefit…Examples of external scale economies include A. Hollywood filmmaking B. All of the other alternatives c. Silicon Valley OD. Automobile manufacturingWhich of the following statements about external costs is TRUE? A Economics uses the term "external cost" to describe a spillover effect from market activity that is too small to matter to society. B C D Economics ignores the environmental impact of market activities by calling such impact an "external cost.” Economics does not provide guidance for environmental policy since its treats any environmental cost as an "external cost". None of the above statements are true.
- Soybeans are produced and sold in a perfectly competitive market. The fertilizers used in soybean production generate a negative externality by seeping liquid contaminants into local rivers. The local rivers are, as a result, suffering. (a) Draw a correctly labeled graph of the soybean market, and show each of the following. (i) The marginal private cost, labeled MPC (ii) The marginal social cost, labeled MSC (iii) The marginal social benefit, labeled MSB (iv) The market equilibrium quantity, labeled Qc (v) The socially optimal quantity, labeled Qs (vi) The area of the deadweight loss, shaded completely (b) Assume the government sets a binding price floor such that the quantity demanded in the market is between Qs and Qc. (i) What will happen to the quantity produced? (ii) Will the price floor reduce the deadweight loss? Explain. (c) Assume instead of a price floor, the government decides to impose a lump-sum tax. What will happen to the socially optimal quantity? Explain. (d) Assume…What is the concept of a negative externality in economics? A. A benefit received by individuals who did not incur the cost B. A cost incurred by individuals who did not receive the benefit C. A situation where external parties receive equal benefits and costs D. A situation where the government intervenes in the marketConsider the network effects of delivery service by drones in Rwanda. Identify the best example of a positive external benefit generated as new customers use the drone delivery service. As demand increases for delivery service by drones, a.a wider variety of products may be delivered by drone. b.highways may be built to service remote locations. c.social networks may also grow in popularity in Rwanda. d.goods may be damaged during delivery.