3 Price00000PriceRAWU>А0QuantityThe market for plastic bottles is currently in equilibrium at point T, and the government decides to taxconsumers of plastic bottles. The new socially optimal equilibrium will be at pointA00000AAMRAWU >19WDiD₂The market for plastic bottles is currently in equilibrium at point T, and the govemment decides to taxmanufacturers of plastic bottles. The new socially optimal equilibrium will be at pointQuantity

Equilibrium point is the situation where demand and supply curve for goods intersect at certain…

Price 00000 Price 0 RAWU > A Quantity The market for plastic bottles is currently in equilibrium at point T, and the govemment decides to tax of plastic bottles. The new socially optimal equilibrium will be at point consumers 4. 00000 RAWUV A A e 19 W Di D₂ Quantity The market for plastic bottles is currently in equilibrium at point T, and the govemment decides to tax manufacturers of plastic bottles. The new socially optimal equilibrium will be at point

Price 00000 Price 0 RAWU > A Quantity The market for plastic bottles is currently in equilibrium at point T, and the govemment decides to tax of plastic bottles. The new socially optimal equilibrium will be at point consumers 4. 00000 RAWUV A A e 19 W Di D₂ Quantity The market for plastic bottles is currently in equilibrium at point T, and the govemment decides to tax manufacturers of plastic bottles. The new socially optimal equilibrium will be at point

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 3PA: Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on...

See similar textbooks

Similar questions

Give an example of a positive externality and an example of a negative externality.
Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the marginal social costs. Assume that the marginal private benefits of a firm producing fuel efficient cars are the same as the marginal social benefits. Discuss one wags.r that the government cans ï¬‚y to increase production and sales of fuel efficient cars to the socially desirable amount. Hint: the government is flying to affect production through costs, net benefits.
According to the Coase theorem,a. private actors can reach agreement to solve theproblem of externalities without the government.b. corrective subsidies are the best policy to solvethe problem of positive externalities.c. negative externalities are a problem for societybut positive externalities are not.d. when two private actors amicably solve theproblem of externalities, they shift the problem toa third party
Suppose Scott and Bob live on the same street. in the winter, both of them like their street plowed. Bob's demand is given by 0 = 40 - P, and Scott's demand is gren by 0 = 30 - 2P. Suppose the marginal cost of plowing the snow is constant at $35 (a) What is the social marginal benefit curve? (b) What is the socially efficient amount of plowing? (c) What would be the socially efficient amount of plowing if the marginal cost of plowing were $5?
3. Jonny, Ken, and Lenny each value fire protection differently. Jonny’s demand for the public good is Q = 210 − 30P, Bill’s demand is Q = 210 − 15P, and Coco’s demand is Q = 132 − 12P. If the marginal cost of providing fire protection is $30.00. a. What is the socially optimal level of fire protection provision? b. Under Lindahl pricing, what share of the tax burden would each of the three people pay?
Two towns, each with three members_, arc decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost S360. (n each town, somepeople enjoy fireworks more than others.a. ln the town of Bayport. each of the residents valuesthe public good as follows:Frank $50Joe $100Call ie $300Would fi.rc\vorks pass a cost-benefit analysis?Explain.b. The mayor of Bayport proposes to decide bymajority rule and_, if the fi.re\\'Orks referendumpasses, to split the cost equally among allresidents. Who would vote in favor, and whowould vote against? Would the vote yield thesame answer as the cost-benefit analysis?c. ln the town of River Heights, each of the residentsvalues the public good aS follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost-benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if lhc fireworksreferendum passes, to split the cost equally amongaU residents. Who would vote in favor, and \\•howould vote against?…
Two towns, each with three residents, are decidingwhether to put on a fireworks display to celebrate theNew Year. Fireworks cost $360. In each town, somepeople enjoy fireworks more than others.a. In the town of Bayport, each of the residentsvalues the public good as follows:Frank $50Joe $100Callie $300Would fireworks pass a cost–benefit analysis?Explain.b. The mayor of Bayport proposes to decide bymajority rule and, if the fireworks referendumpasses, to split the cost equally among allresidents. Who would vote in favor, and whowould vote against? Would the vote yield thesame answer as the cost–benefit analysis?c. In the town of River Heights, each of the residentsvalues the public good as follows:Nancy $20Bess $140Ned $160Would fireworks pass a cost–benefit analysis?Explain.d. The mayor of River Heights also proposes todecide by majority rule and, if the fireworksreferendum passes, to split the cost equallyamong all residents. Who would vote in favor,and who would vote against? Would…
Consider placing a tax on a good that has a positive benefit externality of MEB=3 where MSC=2Q and MPB = 21-Q. a. Compare the equilibrium outputs with (i) no tax, (ii) with a Tax of $3, and (iii) at the social optimu. b. In this case, what happens to DWL when a tax is added? Show and explain your reasoning.
. Some dissenting scientists at Environment Canada disagree with the estimate of $1.50 for theenvironmental externality. They believe that the incidence of the externality is not constant acrossdifferent levels of production; instead the size of the externality is proportional to the level of output.That is, the larger is the output, the larger is the externality. Their research suggests that the truesocial cost of cereal production diverges from private costs at every level of production by an amountequal to ten percent of production (note: ten percent, not ten percentage points).The government would like to know the economic effects of implementing a tax to internalise theexternality in this case. Draw the diagram for this market and policy. Solve for all relevant Ps and Qs.Calculate producer surplus
You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 2Q. The external marginal cost of producing the product is MCExternal = 8Q, and the internal cost is MCInternal = 18Q.Instructions: Enter your response rounded to the nearest two decimal places.a. What is the socially efficient level of output? unitsb. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output.Instructions: For correct answers place a check mark. check all that apply Nonrival consumptionunanswered Pollution taxesunanswered Pollution permitsunanswered
uppose that we are considering the market for windmills. The private demand for electric cars is given buy: Qd = 160 − 2? And the private supply of electric cars is given by: Qs = p − 20Suppose also that electrci cars produce a positive externality, with a Marginal Economic Benefit of $30 per unit. 5. What would be the private market equilibrium (p* & Q*)? 6. What is the socially optimal equilibrium (p* & Q*)? 7. What is Producer Surplus and Consumer Surplus in the private market equilibrium? 8. What is the increase in Total Surplus from moving from the private market equilibrium to the socially optimal equilibrium?
5. A producer releases chemical waste into a stream. The negativeeffects of this release are not captured by the market leading to amarket failure. Suppose Q is the amount of chemical waste in thou-sands of barrels, and P is the price per barrel($). The marginal socialbenefit (MSB), marginal private cost (MPC), and marginal externalcost (MEC), respectively areMSB = 60 − 0.1QMPC = 5 + 0.2Q MEC = 0.2Q Calculate the allocative efficient quantity, price, and marginal profit.Note: MSB equals MPB since externality is on production side. Please show answer with explanation, Thank you.