AP ($) 100 90 80 70 Social cost Supply 60 50 40 30 20 2 10 0 0 10 20 30 40 50 60 70 80 90 100 Refer to the figure above. If the government wanted to tax or subsidize this good to achieve the socially-optimal level of output, it would Demand Select one: O a. impose a tax of $20 per unit. O b. introduce a subsidy of $20 per unit. O c. impose a tax of $40 per unit. d. introduce a subsidy of $40 per unit.

AP ($) 100 90 80 70 Social cost Supply 60 50 40 30 20 2 10 0 0 10 20 30 40 50 60 70 80 90 100 Refer to the figure above. If the government wanted to tax or subsidize this good to achieve the socially-optimal level of output, it would Demand Select one: O a. impose a tax of $20 per unit. O b. introduce a subsidy of $20 per unit. O c. impose a tax of $40 per unit. d. introduce a subsidy of $40 per unit.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 5QCMC

See similar textbooks

Similar questions

Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the marginal social costs. Assume that the marginal private benefits of a firm producing fuel efficient cars are the same as the marginal social benefits. Discuss one wags.r that the government cans ï¬‚y to increase production and sales of fuel efficient cars to the socially desirable amount. Hint: the government is flying to affect production through costs, net benefits.
Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
What is the difference between private costs and social costs?
Identify the following situations as an example of a negative or a positive externality: You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds. Your neighbor paints his house a hideous color. Investments in private education raise your countrys standard of living. Trash dumped upstream flows downstream right past your home. Your roommate is a smoker, but you are a nonsmoker.
What is a marketable permit and what incentive does it provide for a firm to account for external costs?
Classify the following pollution-control policies as command-and-control or market incentive based. A state emissions tax on the quantity of carbon emitted by each firm. The federal government requires domestic auto companies to improve car emissions by 2020. The EPA sets national standards for water quality. A city sells permits to films that allow them to emit a specified quantity of pollution. The federal government pays fishermen to preserve salmon.
Education provides both private benefits to those who receive it and broader social benefits for the economy as a whole. Think about the types of policies a government can follow to address the issue of positive spillovers in technology and then suggest a parallel set of policies that governments could follow for addressing positive externalities in education.
Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?
Suppose that Sonys R. Is this a private or social benefit?
Name two public goods and explain why they are public goods.
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?
In a market without environmental regulations, will the supply curve for a film account for private costs, external costs, both, or neither? Explain.