Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 7IAPA
To determine
To compute:
The value of voucher if the government provides voucher to students to the extent where efficient number of students enroll.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Paragraph
Styles
ILOS: A2, C2
Editing
Voice
4. The paper industry has the demand and supply curves shown below:
Price of paper
Quantity demanded
Quantity supplied
80
40
70
50
4
60
60
50
70
a. Suppose that this industry results in extreme externalities. What can be
said about its optimal output?
b. Draw the supply and demand curves for paper. Does the supply curve
reflect the true social costs of producing the product? If not will a supply
curve reflecting the true social costs lies above or below the supply curve
you have drawn?
c. What is the equilibrium price of paper? From the point of view of
reflecting the true social costs, is this price the correct one, or too low or
too high?
Why is a price change NOT an externality?
Select one:
a. A price change affects bystanders, not market participants.
b. A price change does NOT change total costs or benefits, it only changes who buys the good.
c. A change in price changes the marginal benefit of a good but does NOT change who buys and sells the good.
d. A price change redistributes costs but not benefits.
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 market
Chapter 10 Solutions
Foundations of Economics (8th Edition)
Ch. 10 - Prob. 1SPPACh. 10 - Prob. 2SPPACh. 10 - Prob. 3SPPACh. 10 - Prob. 4SPPACh. 10 - Prob. 5SPPACh. 10 - Prob. 6SPPACh. 10 - Prob. 7SPPACh. 10 - Prob. 8SPPACh. 10 - Prob. 9SPPACh. 10 - Prob. 10SPPA
Ch. 10 - Prob. 1IAPACh. 10 - Prob. 2IAPACh. 10 - Prob. 3IAPACh. 10 - Use the following information to work Problems 3...Ch. 10 - Prob. 5IAPACh. 10 - Prob. 6IAPACh. 10 - Prob. 7IAPACh. 10 - Prob. 8IAPACh. 10 - Prob. 9IAPACh. 10 - Prob. 1MCQCh. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQ
Knowledge Booster
Similar questions
- This graph represents the tobacco industry. IPrice 16 14 Social Cost 12 10 Private Cost 8 6 4 Demand 200 500 650 Quantity a) Without any government intervention, what is the market determined price and quantity? b) What is the price of the externality? c) What is the socially optimal price and quantity? d) What should the government do (impose a tax or provide a subsidy) to internalize this externality? What is the amount of the the corrective tax/subsidy needed to be to move the outcome from the market equilibrium to the socially-optimal outcome?arrow_forwardSome economists claim that early child care generates an external benefit to society. Use the below graph to answer the following questions. Price ($ per month) Supply 1,300 1,200 1,000 900 Marginal Social Benefit 1. Marginal Private Benefit 23 26 Quantity (millions per month) What is the market equilibrium? What is the socially optimal outcome? How do they differ? a. b. The government is planning to provide a per-unit subsidy for child care to achieve the socially optimal outcome. How large should this subsidy be? с. How much is the total government subsidy each month to reach a socially optimal outcome?arrow_forwardThis graph shows the market for antifreeze. Use it to answer the next questions. 8 6. 1 100 200 300 400 500 600 700 800 900 1000 1100 Quantity Question 8 The production of antifreeze creates pollution. The pollution imposes a cost of $2 per gallon on society. What is the marginal social cost of the 500th gallon of antifreeze? Answer is a whole number; do not include a dollar sign (e.g. 10).arrow_forward
- What are Externalities? What some strategies the Government may use to address both positive and negative externalitiesarrow_forwardWhat are externalities; and how the government can fix itarrow_forwardgraph that show the price of donuts before and after the positive externality impacted the price of donuts in a donut shop.arrow_forward
- A situation in which the Marginal Social Cost is greater than the Marginal Private Cost is a. Positive Consumption Externality ○ b. Positive Production Externality c. Negative Production Externality ○ d. Negative Consumption Externality Clear my choicearrow_forwardDraw diagram to show the effect of a positive externality that occurs as a result of a consumer’s decision making process. (before and after the total social benefit is considered) In which ways can a government make sure that the social cost is reflected in the firm’s supply? How can the government make sure that the social benefit is reflected in the consumer’s demand?arrow_forwardWhich of the following is a positive externality? A. bike pathsB. contaminated waterC. food produced in unsanitary processing plantsD. automobiles produced without seat beltsarrow_forward
- What is the fundamental problem with goods that have externalities? a. private costs do not include social costs b. social costs do not include private costs c. decisions are generally made only considering social costs.arrow_forward1. When a production externality has a beneficial effect on a bystander at the market equilibrium a. the market will be efficient b. the social cost of production is less than the private cost c. society is unlikely to benefit from production subsidies d. the private benefit from consumption is less than the social cost of production 2. In the short term, we would expect home construction to have a: a. High elasticity of demand b. Low elasticity of demand c. Low elasticity of supply d. High elasticity of supply 3. Which of the following would be associated with monetary policy operations in response to an economic downturn: a. A shift of the money demand curve to the right. b. A shift of the money supply curve to the right. c. A shift of the money demand curve to the left. d. A shift of the money supply curve to the left. 4. If the government cuts government spending, then over time the government budget deficit: a. will definitely rise b. will definitely fall c. may fall, or…arrow_forwardThe following table shows how the marginal benefit of a service varies for five consumers. Quantity 1 Serkan Asuman Bahar Murat Meriç 3 100 75 50 125 200 4 75 50 25 125 150 150 125 100 200 600 a. Derive the demand curve for this service assuming that it is a public good. If marginal cost of the good is 850, what is the efficient output of the public good? c. If marginal cost of the good is 425, what is the efficient output of the public good? d. If marginal cost of the good is 850, what is the efficient output assuming it is private good? 125 100 75 150 400 o.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning