Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 17, Problem 27APA
To determine
Subsidy amount.
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Students have asked these similar questions
Use the table below to answer the questions:
Quantity
Supplied (Private Supplied (Social
Cost only)
12,000
14,000
17,000
20,000
24,000
Quantity
Quantity
Demanded
Price
19,000
14,000
9000
5000
1000
$50
$55
$60
$65
$70
Cost)
6000
7500
9000
11,000
14,000
(a) Find the equilibrium price, assuming sellers ignore negative externalities.
(b) Find the equilibrium quantity, assuming sellers ignore negative externalities.
(c) Find the optimal price, including external costs.
(d) Find the optimal quantity, including external costs.
price
100
90
MPC-MSC
80
70
30,67.5
60
40,60)
50
30,45)
40
40,37.5)
MSB
30
20
10
MPB
10 20 30 40 50 60 70 80 90 100
quantity of trees (thousands)
Trees planted in urban areas improve air quality, reduce soil erosion, and moderate
temperatures in hot cities. The figure depicts the market for trees planted in Tempe, Arizona.
What is the value of the deadweight loss if the market is unregulated?
To review this concept, see the section Positive Externalities.
100
50
225
112.5
I
Price and cost (thousands of dollars per student)
20
16
12
8
0
200
A) 0 students; 400 students
B) 600 students; 600 students
C) 400 students; 600 students
D) 600 students; 400 students
E) 400 students; 400 students
S = MC
MSB
MB
400 600 800 1,000
Quantity (students per year)
35)
35) The figure above shows the market for private elementary school education in Chicago. There is
no external cost of private elementary education. If the government does not intervene in this
market, the equilibrium number of students being privately educated is
and the
efficient quantity is
Chapter 17 Solutions
Macroeconomics
Ch. 17.1 - Prob. 1RQCh. 17.1 - Prob. 2RQCh. 17.2 - Prob. 1RQCh. 17.2 - Prob. 2RQCh. 17.2 - Prob. 3RQCh. 17.2 - Prob. 4RQCh. 17.3 - Prob. 1RQCh. 17.3 - Prob. 2RQCh. 17.3 - Prob. 3RQCh. 17.4 - Prob. 1RQ
Ch. 17.4 - Prob. 2RQCh. 17.4 - Prob. 3RQCh. 17.4 - Prob. 4RQCh. 17 - Prob. 1SPACh. 17 - Prob. 2SPACh. 17 - Prob. 3SPACh. 17 - Prob. 4SPACh. 17 - Prob. 5SPACh. 17 - Prob. 6SPACh. 17 - Prob. 7SPACh. 17 - Prob. 8SPACh. 17 - Prob. 9SPACh. 17 - Prob. 10APACh. 17 - Prob. 11APACh. 17 - Prob. 12APACh. 17 - Prob. 13APACh. 17 - Prob. 14APACh. 17 - Prob. 15APACh. 17 - Prob. 16APACh. 17 - Prob. 17APACh. 17 - Prob. 18APACh. 17 - Prob. 19APACh. 17 - Prob. 20APACh. 17 - Prob. 21APACh. 17 - Prob. 22APACh. 17 - Prob. 23APACh. 17 - Prob. 24APACh. 17 - Prob. 25APACh. 17 - Prob. 26APACh. 17 - Prob. 27APACh. 17 - Prob. 28APACh. 17 - Prob. 29APACh. 17 - Prob. 30APA
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- Externalities Application-no credit given for answers based outside of course sources Part 2 (16 pts): Use the graph below to answer the questions on the next slide. Price $120 $80 Seher City D S 0 160 320 Quantity of potatoes 5arrow_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_forwardUse the graph attached below as a starting point (either download it or print it out). Add curves, labels, etc. to this graph in order to show the following: 1. Show that this good has a $4/unit negative externality (external cost), such as pollution. 2. Shade the area that represents the Deadweight Loss (lost gains from trade) caused by the external cost. 3. Show a tax or subsidy wedge (whichever you think is appropriate) that will solve the problem of the external cost. 4. Show the socially optimal level of production that the Pigouvian tax or subsidy above will help the market to achieve. You may use software or pencil and paper to complete this graph. Upload it here when you are done.arrow_forward
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