Give typing answer with explanation and conclusion Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000.Would a tax or a subsidy be more appropriate for this externality?O a. TaxO b. SubsidyOc. Neither0Scen$11/W$1MTheIONb.ExternalC. NeitherSTION 4O c. anO d. a privateefitre good idea is $100MHUUBES, San external benefit?ur neighbor might experience heworld for the better, the private benefit ofar is $20,000 and the social cost of one compact-tend to stay away from neighborhoods that have a lot of burglar alarms is

Market equilibrium: At the market equilibrium we have demand equals to supply. Or at market…

Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000. Would a tax or a subsidy be more appropriate for this externality? O a. Tax O b. Subsidy Oc. Neither

Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000. Would a tax or a subsidy be more appropriate for this externality? O a. Tax O b. Subsidy Oc. Neither

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...

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Question

Give typing answer with explanation and conclusion

Scenario 1: In the market for automobiles, the private cost of one compact car is $20,000 and the social cost of one compact car is $30,000.
Would a tax or a subsidy be more appropriate for this externality?
O a. Tax
O b. Subsidy
Oc. Neither
0
Scen
$11/
W
$1M
The
ION
b.External
C. Neither
STION 4
O c. an
O d. a private
efit
re good idea is $100M
HUUBES, S
an external benefit?
ur neighbor might experience he
world for the better, the private benefit of
ar is $20,000 and the social cost of one compact-
tend to stay away from neighborhoods that have a lot of burglar alarms is

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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.
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