3.) Consider the market for beehives. Suppose that the demand for beehives of local apiarists is given by pD = 43 – 4QD and the supply curve of beehives is given by PS = 3Q$ + 8. Suppose that bees from the apiarists' beehives sometimes sting bystanders, which the bystanders find painful and unpleasant. These stings thus represent a negative externality. The cost of the stings from the bees of any given beehive is equal to $7.00. a.) Compute total surplus in this market if there is no intervention from the local government. b.) Compute total surplus in this market if the local government imposes the Pigouvian tax to correct the externality. c.) What is the dead weight loss of the government not taxing in this market?
3.) Consider the market for beehives. Suppose that the demand for beehives of local apiarists is given by pD = 43 – 4QD and the supply curve of beehives is given by PS = 3Q$ + 8. Suppose that bees from the apiarists' beehives sometimes sting bystanders, which the bystanders find painful and unpleasant. These stings thus represent a negative externality. The cost of the stings from the bees of any given beehive is equal to $7.00. a.) Compute total surplus in this market if there is no intervention from the local government. b.) Compute total surplus in this market if the local government imposes the Pigouvian tax to correct the externality. c.) What is the dead weight loss of the government not taxing in this market?
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.4P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning