An externality     is a private cost or benefit that results from the production or consumption of a good or service that is external to a market.     refers to production or consumption that occurs outdoors.     enhances market efficiency.     is a benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service

Suppose supply is P= ―3 + (2/5)Qs and demand is P= 51 ― (1/10)Qd. Further, suppose that each unit carries a negative externality that costs someone in society $4. What is the socially optimal quantity, and how much would buyers need to pay and producers need to receive to achieve that outcome?

If positive externalities exist in a market, then OSocial cost is greater than private cost OSocial cost is equal to private cost OSocial cost is lower than private cost

The market for plasticans is perfectly competitive. Market Supply is given by Q=6P and Market Demand is given by Q=487-3P. Each extra unit of plastican produced imposes a negative externality of $5. What is the total cost of the externality at the market equilibrium? Enter a number only, no $ sign. Do NOT include a negative sign. 1,623.33

Too much of a good or service is produced when there is a Private cost External benefit Public good Positive externality Negative externality

Markets and Common Resources.  This problem is also called “the tragedy of the commons.” There are seven families in the village.  Each family has $70 to spend on either a steer or a bond.   A steer today costs $70 per steer; a bond costs $70.   In one year, a family can sell their steer that uses the common grazing land (the common resource) for the village.   The revenue and price received for selling a steer depend upon how many other families are selling their steers.  See the demand for steers in the graph below.   A family can buy one steer or buy one bond.  Therefore, the number of steers is the number of families that decided to buy a steer. If a family holds the $70 in cash, the family will earn nothing.   Each family has $70.   If a family buys a bond today for $70, they will receive $90 in one year.    A family can only earn income from raising & selling steers or from buying and holding bonds. Hint: complete the table first.     How many families will want to buy a…

Give an example of a real-life situation that gives rise to externality. Explain clearly about the nature of external effect. Explain why the free unregulated outcome may be subject to problems and how the problem in this example has been or can be remedied. Answer should be kept within 200 words.

If the production of a good causes a negative externality, the efficient level of output of that good is zero. False True

Efficiency losses Are not possible if suppliers are willing to produce and sell a product. Can only result from underproduction. Can only result from overproduction. None of the above.

Suppose demand is QD=9−P and supply is QS=P. There is a constant positive externality of ​$4 per unit​ (marginal external​ benefit, MEB​ = ​$4​). Find the market equilibrium quantity and the socially optimal quantity. The market equilibrium quantity is    enter your response here. ​(Round your answer to one decimal place.​) The socially optimal quantity is    enter your response here. ​(Round your answer to one decimal place.​)