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22.) Consider a market subject to a negative externality cause by pollution. Suppose that, initially, the government is dealing with this negative externality using a Pigouvian tax. The government is considering switching its handling of the negative externality to a scheme where it auctions off pollution licenses to producer instead. If the government makes this policy change, then producer surplus will and government surplus will a.) Increase, increase b.) Decrease, decrease || c.) Decrease, increase d.) None of the above 23.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their town park are given by PiD =100–QD,_PmD=200–2QP, and Pcº =300–3QD respectively. What is the slope of the MBS curve for statues? a.) -4 b.) -5 с.) -6 d.) -7 24.) Suppose that, in the above example, statues are sold in a competitive market with a supply curve given by PS =516+Q$. What quantity of statues should the local government install in the park to maximize total surplus? a.) 10 b.) 11 с.) 12 d.) 13

22.) Consider a market subject to a negative externality cause by pollution. Suppose that, initially, the government is dealing with this negative externality using a Pigouvian tax. The government is considering switching its handling of the negative externality to a scheme where it auctions off pollution licenses to producer instead. If the government makes this policy change, then producer surplus will and government surplus will a.) Increase, increase b.) Decrease, decrease || c.) Decrease, increase d.) None of the above 23.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their town park are given by PiD =100–QD,_PmD=200–2QP, and Pcº =300–3QD respectively. What is the slope of the MBS curve for statues? a.) -4 b.) -5 с.) -6 d.) -7 24.) Suppose that, in the above example, statues are sold in a competitive market with a supply curve given by PS =516+Q$. What quantity of statues should the local government install in the park to maximize total surplus? a.) 10 b.) 11 с.) 12 d.) 13

ECON MICRO
ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.3P: (Negative Externalities) Suppose you wish to reduce a negative externality by imposing a tax on the...
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22.) Consider a market subject to a negative externality cause by pollution. Suppose that, initially, the government is dealing with this negative externality using a Pigouvian tax. The government is considering switching its handling of the negative externality to a scheme where it auctions off pollution licenses to producer instead. If the government makes this policy change, then producer surplus will and government surplus will a.) Increase, increase b.) Decrease, decrease|| c.) Decrease, increase d.) None of the above 23.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their town park are given by PıP =100–QP,_PmP =200–2QP, and PcP =300–3QP respectively. What is the slope of the MBS curve for statues? а.) 4 b.) -5 с.) -6 d.) -7 24.) Suppose that, in the above example, statues are sold in a competitive market with a supply curve given by PS =516+Q$. What quantity of statues should the local government install in the park to maximize total surplus? a.) 10 b.) 11 с.) 12 d.) 13
Transcribed Image Text:22.) Consider a market subject to a negative externality cause by pollution. Suppose that, initially, the government is dealing with this negative externality using a Pigouvian tax. The government is considering switching its handling of the negative externality to a scheme where it auctions off pollution licenses to producer instead. If the government makes this policy change, then producer surplus will and government surplus will a.) Increase, increase b.) Decrease, decrease|| c.) Decrease, increase d.) None of the above 23.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their town park are given by PıP =100–QP,_PmP =200–2QP, and PcP =300–3QP respectively. What is the slope of the MBS curve for statues? а.) 4 b.) -5 с.) -6 d.) -7 24.) Suppose that, in the above example, statues are sold in a competitive market with a supply curve given by PS =516+Q$. What quantity of statues should the local government install in the park to maximize total surplus? a.) 10 b.) 11 с.) 12 d.) 13
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