MINDTAP Aplia Homework: Externalities and the Environment 2. Market solutions to correct for negative externalities This problem asks you to examine the costs in the market for gasoline. The cost of consuming gasoline comes in two parts: 1. First, the driver pays the market price for a gallon of gasoline 2. In addition, other people who live in the area bear a cost because they suffer from the pollution created by consuming gasoline; this is the external cost of consuming gasoline. Because external costs result from the consumption of gasoline, the marginal social cost of gasoline exceeds the marginal private cost. The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 7 Demand Ssocial ch End PgUp F11 DII PrtScn Home F2 F3 F4 F5 F6 F7 F8 F9 F10 23 24 & ) 8. 9- R T Y U D F G H J K L く 3. ollars per gallon) y Blackboard Content- Blackboard Learn Website The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 6. Demand S. social 3 S. private 16 24 32 40 48 56 QUANTITY (Millions of gallons of gasoline) According to the graph, if the government does not intervene in the market for gasoline, the equilibrium price of a gallon of gasoline will be $ earch DII PrtScn Home End PgUp F11 F2 F3 F4 F5 F6 F7 F8 F9 F10 2$ ) л 8. 9. T Y P D F G H J K E. PRICE (Dollars per gallon) 7,
MINDTAP Aplia Homework: Externalities and the Environment 2. Market solutions to correct for negative externalities This problem asks you to examine the costs in the market for gasoline. The cost of consuming gasoline comes in two parts: 1. First, the driver pays the market price for a gallon of gasoline 2. In addition, other people who live in the area bear a cost because they suffer from the pollution created by consuming gasoline; this is the external cost of consuming gasoline. Because external costs result from the consumption of gasoline, the marginal social cost of gasoline exceeds the marginal private cost. The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 7 Demand Ssocial ch End PgUp F11 DII PrtScn Home F2 F3 F4 F5 F6 F7 F8 F9 F10 23 24 & ) 8. 9- R T Y U D F G H J K L く 3. ollars per gallon) y Blackboard Content- Blackboard Learn Website The following graph shows the demand for gasoline, the marginal private cost of a gallon of gasoline, and the marginal social cost of producing and consuming gasoline. 6. Demand S. social 3 S. private 16 24 32 40 48 56 QUANTITY (Millions of gallons of gasoline) According to the graph, if the government does not intervene in the market for gasoline, the equilibrium price of a gallon of gasoline will be $ earch DII PrtScn Home End PgUp F11 F2 F3 F4 F5 F6 F7 F8 F9 F10 2$ ) л 8. 9. T Y P D F G H J K E. PRICE (Dollars per gallon) 7,
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 10QP
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