Mn5. QUESTION 12Figure 10-12PriceQUESTION 1316ExternalbenefitFigure 6-2424Refer to Figure 10-12. An alternative label for the quantity ₂ would beOa.EXTERNALO b. PRIVATEOC.MARKETO d. 2OPTIMUM-30+18-Price12+6+21 2280Supply160Line 1210 240Line 2QuantitySupply320QuantityRefer to Figure 6-24. The price paid by buyers after the tax is imposed isO a. $18.Ob. $21.O c. $16.O d. $24.

***Since the student has posted multiple questions so the expert is required to solve only the first…

Answered: Figure 10-12 Price External benefit 21…

Figure 10-12 Price External benefit 21 22 Supply Line 1 Line 2 Quantity Refer to Figure 10-12. An alternative label for the quantity ₂ would be Oa.EXTERNAL Ob. PRIVATE OC.MARKET Od. OPTIMUM

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 41P: Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once...

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Market Failure Analysis

To understand Market failure, we need to first understand welfare economics. An Italian economist, Vilfredo Pareto stated that allocation of resources in an efficient manner such that an economic change, which harms no one and makes someone better off, indicates an increase in social welfare. It is also called Pareto Optimality, where resources cannot further be reallocated without harming one. This does not apply to those economic changes, which harm some and benefit others. social welfare increases if the utility of any of its members' increases and none decrease in the economy.

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In the tradeoff between economic output and environmental protection, what do the combinations on the protection possibility curve represent?
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?
Give an example of a positive externality and an example of a negative externality.
What is an externality?
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
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