Bundle: Principles of Microeconomics, 7th + LMS Integrated Aplia, 1 term Printed Access Card
7th Edition
ISBN: 9781305242463
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 10, Problem 3PA
Subpart (a):
To determine
Classification of positive and negative externality.
Subpart (b):
To determine
Classification of positive and negative externality.
Subpart (c):
To determine
Classification of positive and negative externality.
Subpart (d):
To determine
Classification of positive and negative externality.
Subpart (e):
To determine
Classification of positive and negative externality.
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Identify at least one positive and negative externality from running a hamburger shop.
What is one example of how an externality could affect the price of your hamburger?
Negative externalities and fast food
Task 6b Explain the concept of negative externalities
Point
value
In no more than 200 words, briefly explain the concept of negative externalities. 4 points
Does eating too much fast food generate a negative externality? Why or why not?
Format - Evidence of negative externalities | Reflection (written)
Point
Answer box
value
Negative externalities and fast food
Task 6c | Negative externality: Consuming too much fast food
Create two demand and supply diagrams to demonstrate the following:
In your first diagram show the negative externality of consuming too much fast food. Carefully
label your diagram and identify the deadweight loss.
In your second diagram add a tax to this market. Highlight what happens to consumption.
In a dot point below your last diagram briefly tell us whether the second diagram has a
deadweight loss.
Point
value
8 points
Format - Evidence of negative externality of consuming too much fast food | Reflection (written)
Answer box…
Draw a graph that models a positive externality in consumption (label and clearly explain graph)
Explain:
i) The difference between the competitive equilibrium quantity and the socially optimal level quantity.
ii) A possible intervention to bring the competitive equilibrium quantity closer to the socially optimal quantity.
iii) An example of a setting in which this type of externality might occur (explain clearly how/why this externality happens).
Chapter 10 Solutions
Bundle: Principles of Microeconomics, 7th + LMS Integrated Aplia, 1 term Printed Access Card
Ch. 10.1 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.3 - Prob. 3QQCh. 10 - Prob. 1CQQCh. 10 - Prob. 2CQQCh. 10 - Prob. 3CQQCh. 10 - Prob. 4CQQCh. 10 - Prob. 5CQQCh. 10 - Prob. 6CQQCh. 10 - Prob. 1QR
Ch. 10 - Prob. 2QRCh. 10 - Prob. 3QRCh. 10 - Prob. 4QRCh. 10 - Prob. 5QRCh. 10 - Prob. 6QRCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Prob. 3PACh. 10 - Greater consumption of alcohol leads to more motor...Ch. 10 - Prob. 5PACh. 10 - The many identical residents of Whoville love...Ch. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PACh. 10 - Prob. 10PA
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- Externalities are a form of market failure. Identify two externalities related to Covid-19, one positive and one negative. Graph and explain how each externality affects the optimal amount of the good that is generating the externality.arrow_forwardDuring the COVID-19 pandemic, alcohol consumption increased dramatically. In response, the government is considering increasing the tax rate on alcohol. It's known that the demand for alcohol is inelastic, and the supply of alcohol is perfectly elastic. Which of the following statements are true? (Select all that apply.) Question 5Answer a. A tax on alcohol is one way to make consumer internalize the cost of the externalities associated with drinking, such as long-term health implications. b. Regardless of how the tax is implemented, consumers will pay the full amount of the tax. c. It doesn't matter how the tax is implemented. d. Consumers and suppliers will split the burden of the tax. e. The government will collect more revenue if the tax is on the suppliers. f. Alcohol consumption will decrease more in the short-run than in the long-run. g. Alcohol consumption will decrease more in the long-run than in the short-run. h. There are positive…arrow_forwardGive an example of a positive and negative externality. Explain why market outcomes are inefficient in the presence of these externalities.arrow_forward
- Explain a positive and negative externality that you have recently consumed. Please relate your answer to the characteristics of elasticity. Why does the government have to get involved when an externality is present in the market?arrow_forwarddraw a graph of a product without any externalityarrow_forwardThe Cemex plant in Davenport produced cement. The production of cement created dust which traveled through the air and landed on the nearby area. Testing at an elementary school and fire department near the plant showed toxic levels of Chromium 6 resulting from the dust. Using the concept of externalities and the graph below, explain what kind of externality this event created and the effects this had on economic efficiency. Be sure to indicate any differences between market price and quantity for cement and the efficient price and quantity.arrow_forward
- If a positive demand-side externality (also called a positive externality in consumption) occurs, then: a. The market provides the efficient allocation. b. The market under-provides the product, meaning the market allocation is less than the efficient allocation. c. The market does not provided the product, hence market failure occurs. d. The market over-provides the product, meaning the market allocation is more than the efficient allocation.arrow_forwardwhy do externalities make market outcomes inefficient?arrow_forwardThe market for Booming Berries contains a? a) Negative Externality b) Positive externality How can I tell distinguish if it contains a positive or negative externality with the given information?arrow_forward
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