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d. Suppose that Government bureaucrats had been operating under wrong assumptions: in reality, the true value of the externality for each vaccination is 100+ € monetary units, with positive and small. Which of the following is correct? If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been higher than in the competitive equilibrium If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome None of the others True or False? True False In the presence of a negative externality, the quantity traded in the competitive market equilibrium is smaller than the efficient quantity Government policies designed to address market failures will always lead to efficiency Public goods and asymmetric information, much like externalities, can lead to market failure

d. Suppose that Government bureaucrats had been operating under wrong assumptions: in reality, the true value of the externality for each vaccination is 100+ € monetary units, with positive and small. Which of the following is correct? If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been higher than in the competitive equilibrium If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome None of the others True or False? True False In the presence of a negative externality, the quantity traded in the competitive market equilibrium is smaller than the efficient quantity Government policies designed to address market failures will always lead to efficiency Public goods and asymmetric information, much like externalities, can lead to market failure

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.6P
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d./ Suppose that Government bureaucrats had been operating under wrong assumptions: in reality, the true value of the externality for each vaccination is 100+ € monetary units, with a positive and small. Which of the following is correct? If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been higher than in the competitive equilibrium If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have lower than in the competitive equilibrium been If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome None of the others *True or False? True False In the presence of a negative externality, the quantity traded in the competitive market equilibrium is smaller than the efficient quantity Government policies designed to address market failures will always lead to efficiency Public goods and asymmetric information, much like externalities, can lead to market failure . O O O O
Transcribed Image Text:d./ Suppose that Government bureaucrats had been operating under wrong assumptions: in reality, the true value of the externality for each vaccination is 100+ € monetary units, with a positive and small. Which of the following is correct? If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been higher than in the competitive equilibrium If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome If the Government had implemented a tax of 100 m.u. per vaccination, the deadweight loss would have lower than in the competitive equilibrium been If the Government had implemented a subsidy of 100 m.u. per vaccination, the deadweight loss would have been lower than in the competitive equilibrium and higher than in the socially optimal outcome None of the others *True or False? True False In the presence of a negative externality, the quantity traded in the competitive market equilibrium is smaller than the efficient quantity Government policies designed to address market failures will always lead to efficiency Public goods and asymmetric information, much like externalities, can lead to market failure . O O O O
Suppose that supply and demand for vaccines can be represented by P = 100 + 3Q and P = 500-Q, respectively. Further, assume that each vaccination is associated with a positive externality, with an estimated value of 100 monetary units. a. What is the competitive equilibrium in this market? Q = 100 and P = 400 O Q = 125 and P = 375 Q 125 and P = 475 Q = 75 and P = 425 None of the others Calculator Regarding the socially efficient outcome, which of the following is correct? MCSocial QOpt = 125 since this is the value for which MB Social QOpt = 125 and the total value of the externality is 100 O QOpt = 100 since the deadweight loss is equal to 0 O QOpt=75 and the total value of the externality is 7500 None of the others b.
Transcribed Image Text:Suppose that supply and demand for vaccines can be represented by P = 100 + 3Q and P = 500-Q, respectively. Further, assume that each vaccination is associated with a positive externality, with an estimated value of 100 monetary units. a. What is the competitive equilibrium in this market? Q = 100 and P = 400 O Q = 125 and P = 375 Q 125 and P = 475 Q = 75 and P = 425 None of the others Calculator Regarding the socially efficient outcome, which of the following is correct? MCSocial QOpt = 125 since this is the value for which MB Social QOpt = 125 and the total value of the externality is 100 O QOpt = 100 since the deadweight loss is equal to 0 O QOpt=75 and the total value of the externality is 7500 None of the others b.
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