An externality exists wheneverO the economy can benefit from government intervention.a person engages in an activity that influences the well-being of a bystander and yet neither pays norreceives payment for that effect.O markets are not able to reach equilibrium.O a firm sells its product in a foreign market.

The firm produces various goods and services and has a cost on the production on the goods and…

Answered: O the economy can benefit from…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter3: Economic Decision Makers

Section: Chapter Questions

Problem 3.12P

See similar textbooks

Similar questions

Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
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?
What is an external benefit? An external benefit is a benefit that OA. always equals external cost OB. experiences increasing marginal returns C. affects someone other than the buyer of a good OD. is greatest at the equilibrium point
For a product with external benefits like vaccines (positive externality),which of the following is true?Select one: Oa. The market equilibrium results in too much of the good compared to what is optimalOb. The market equilibrium results in too little of the good compared to what is optimal.Oc. The market will not provide the good; it must be publicly funded.O d. Large economies of scale work as a barrier to firm entry.
(a) Explain the difference between a positive externality and a negative externality and why each result in an equilibrium point that is not optimal for society. (b) which externality results in an equilibrium quantity that is higher than the optimal social quantity of a good? (c) how can the impact of the externality in part b be corrected?
a. Suppose a market is introduced for the externality Eveline causes on Victor. Let us denote by px the price of this externality. Suppose "property rights" are assigned such that Victor has the right not to experience the smell of cooked cabbage. The competitive equilibrium price ratios pm and Px are equal to? b. Derive the market allocation corresponding to the new competitive equilibrium of the economy formed by Eveline and Victor (ce, me) and (cv,mv). c. Is the new competitive equilibrium Pareto efficient?
When the government levies a tax on a goodequal to the external cost associated with thegood’s production, it _________ the price paidby consumers and makes the market outcome_________ efficient.a. increases; moreb. increases; lessc. decreases; mored. decreases; less
Please answer the following questions.1. Explain the factors affecting Demand.2. Explain the difference between positive and negative externalities alongwith an example.3. How are public goods different from private goods?4. Explain the Law of Supply.5. With regard to demand and Supply, explain the point of MarketEquilibrium.
Two forms of market failures are ____ and ____. A. public goods ; externalities B. Pareto efficient allocations ; Kald0r-Hicks efficient allocations C. private costs ; social costs D. dead-weight loss ; Pigouvian tax

Recommended textbooks for you

ECON MACRO

Economics

ISBN:

9781337000529

Author:

William A. McEachern

Publisher:

Cengage Learning

Economics: Private and Public Choice (MindTap Cou…

Economics

ISBN:

9781305506725

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Microeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506893

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

ECON MACRO

Economics

ISBN:

9781337000529

Author:

William A. McEachern

Publisher:

Cengage Learning

Economics: Private and Public Choice (MindTap Cou…

Economics

ISBN:

9781305506725

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Microeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506893

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Macroeconomics: Private and Public Choice (MindTa…

Economics

ISBN:

9781305506756

Author:

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:

Cengage Learning

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

SEE MORE TEXTBOOKS

O the economy can benefit from government intervention. O a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives payment for that effect. O markets are not able to reach equilibrium. Oa firm sells its product in a foreign market.