Atlantis produces only coral beads and exotic shells. The table shows the marginal benefit and marginal cost schedules for exotic shells. If Atlantis produces 43 exotic shells, the marginal benefit from exotic shells To achieve allocative efficiency. Atlantis must OA. is less than; increase OB. exceeds; increase OC. is less than; decrease. OD. exceeds; decrease the marginal cost of exotic shells. the quantity of exotic shells produced. Marginal Exotic shells benefit (per month) 39 11 TI 40 9 41 7 42 5 43 44 (beads per shell) 4 Marginal cost 1 1 2 5 17 29

Atlantis produces only coral beads and exotic shells. The table shows the marginal benefit and marginal cost schedules for exotic shells. If Atlantis produces 43 exotic shells, the marginal benefit from exotic shells To achieve allocative efficiency. Atlantis must OA. is less than; increase OB. exceeds; increase OC. is less than; decrease. OD. exceeds; decrease the marginal cost of exotic shells. the quantity of exotic shells produced. Marginal Exotic shells benefit (per month) 39 11 TI 40 9 41 7 42 5 43 44 (beads per shell) 4 Marginal cost 1 1 2 5 17 29

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 10SCQ: Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the...

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Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.) Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs. What is the optimal level of sewage for this city? Why not just pass a law that films can emit zero sewage? After all, the total benefits of zero emissions exceed the total costs.
It is clear that productive inefficiency is a waste since resources are used in a way that produces less goods and services than a nation is capable of. Why is allocative inefficiency also wasteful?
What is an example of a problem in the world today, not mentioned in the chapter, that has an economic dimension?
In what ways (it) company investments in research and development create positive externalities?
HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow HighFlyer Airlines to give passengers more comfort and sell more tickets at a higher price. However, redesigning the cabin means rethinking many other elements of the airplane as well, like engine and luggage placement, and the most efficient shape of the plane for moving through the air. HighFlyer Airlines has developed a list of possible methods to increase cabin space, along with estimates of how these approaches would affect the planes operating costs and ticket sales. Based on these estimates, Table 13.5 shows the value of R, how much should the firm invest in R on top of the private return; that is, an R private return to HighFlyer Airlines would have a 9 social return. How much investment is socially optimal at the 6 interest rate?
Wireless, high-speed Internet is provided for free inthe airport of the city of Communityville.a. At first, only a few people use the service.What type of a good is this and why?b. Eventually, as more people find out aboutthe service and start using it, the speed of theconnection begins to fall. Now what type of agood is the wireless Internet service?c. What problem might result and why? What is onepossible way to correct this problem?
Imagine a country XYZ that produces only two goods—chairs and tables. Together, the chairs and tablesindustries use all of the economy’s factors of production. The table below shows the productionpossibilities for XYZ:Production Possibilities for XYZChairs Tables600 0450 150300 250150 325 0 375a. Draw a Production Possibility Frontier for the country using the information in tableabove. b. What is the opportunity cost of increasing chairs production from 450 chairs to 600chairs?c. What is the opportunity cost of increasing tables production from 250 tables to 325tables?d. Plot the point denoting 300 chairs and 300 tables on your graph above. Is this point“feasible”? Why or why not?e. Plot the point denoting 300 chairs and 50 tables on your graph above. Should XYZ beproducing at this point? Why or why not?
Suppose that there are only two fisherman, Zach and Jacob, who fish along a certain were built along the coast. They would each benefit if lighthouses were built along the coast where they fish. The marginal cost of building each additional lighthouse is $100. The marginal benefit to Zach of each additional lighthouse is 90-Q, and the marginal benefit to Jacob is 40-Q, where Q equals the number of lighthouses. a. Explain why we might not expect to find the efficient number of lighthouses along this coast. b. What is the efficient number of lighthouses? What would be the net benefits to Zach and Jacob if the efficient number were provided?
The three residents of Smallville are consideringa fireworks display. Clark values this public goodat $80; Lana at $50; and Pete (who dislikesfireworks) at −$30. Fireworks cost the town $120,or $40 per person. The efficient outcome is for thetowna. to provide the public good because the medianperson values it more than its cost per person.b. to provide the public good because a majorityof the residents value it more than its cost perperson.c. to provide the public good because the total valueof a majority exceeds the total cost.d. not to provide the public good because the totalvalue of all residents is less than the total cost.
A student is studying for an exam 2 hours a day and is debating whether 3 Baluolto study an extra hour. The student's marginal benefit *
Question. Using the table below, answer the questions that follow it. A B C D EPizza 0 1 2 3 4Robot 20 18 14 8 0 a. What are the assumptions for a given production possibilities curve? b. What is the opportunity cost of one pizza when moving from B to point C? What moving from D to point E? c. Do these combinations demonstrate constant or increasing opportunity costs?
It’s Friday night. You already have a ticket to aconcert, which cost you $30. A friend invites youto go out for a game of paintball instead. Admission would cost you $25, and you think you’d get$25 worth of enjoyment out of it. Your concertticket is nonrefundable. What is your opportunitycost (in dollars) of playing paintball?