The graph illustrates the market for cotton.Suppose that the cotton growers use a chemical to control insects and waste flowsinto the town's river.The marginal social cost of producing the cotton is double the marginal privatecost.If no one owns the river and the two takes no action to control the waste, what isthe quantity of cotton and the deadweight loss created?If no one owns the river, the quantity of cotton produced istons a month.150-125-100-75-50-25-0-0Price (dollars per ton)SD50 100 150 200 250 300 350 400 450 500Quantity (tons per month)

Externalities are the harmful or beneficial side effects arise out of production or consumption of…

Answered: The graph illustrates the market for…

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...

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Similar questions

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?
In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output 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 K and L, can you say which one is better and why? In the choice between K. and N, can you say which one is better, and why? If you had to guess, which choice would you think is move likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?
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?
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.
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?
From an economic perspective, is it sound policy to pursue a goal of zero pollution? Why or why not?
Give an example of a positive externality and an example of a negative externality.
Would environmentalists favor command-and-control policies as a way to reduce pollution? Why or why not?
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.
Is zero pollution an optimal goal? Way or why not?
K The graph illustrates the market for cotton Suppose that the coton growers use a chemical to control insects and waste flows into the town's river. The marginal social cost of producing the cotton is double the marginal private cost If no one owns the river and the two takes no action to control the waste, what is the quantity of cotton and the deadweight loss created? CTD If no one owns the river, the quarsity of cotton produced is 60 tons a month. The deadweight loss is $month 300- 320- 280 240 200 140- 120- 80- 40 Price (dollars per ton) D 16 M ID 20 30 40 50 60 70 80 90 100 Quantity (ons par month) Q a G

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