Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax

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Textbook Question
Chapter 12, Problem 41P

Refer to Table 12.2. The externality created by the refrigerator production was \$ 1 00 .

However, once we accounted for both the private and additional external costs, the market price increased by only \$ 5 0 .

If the external costs were \$ 1 00 why did the price only increase by \$ 5 0 when we accounted for all costs?

Students have asked these similar questions
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? Price Quantity Demanded Quantity Supplied before Considering Pollution Cost Quantity Supplied after Considering Pollution Cost \$600 50,000 40,000 30,000 \$650 45,000 45,000 35,000 \$700 40,000 50,000 40,000 \$750 35,000 55,000 45,000 \$800 30,000 60,000 50,000 \$850 25,000 65,000 55,000 \$900 20,000 70,000 60,000 Table12.2 A Supply Shift Caused by Pollution Costs
Refer to the following table. The externality created by the production of refrigerators was \$100. However, once both the private and additional external costs were taken into consideration, the market price increased by only \$50. If the external costs were \$100 why did the price only increase by \$50 when all the costs were taken into account?                                                                             Price  =  \$600, \$650, \$700, \$750, \$800, \$850, \$900                                                 Quantity Demanded = 50,000, 45,000, 40,000, 35,000, 30,000, 25,000, 20,000   Quantity Supplied before Considering Pollution Cost = 40,000, 45,000, 50,000, 55,000, 60,000, 65,000, 70,000                                                                                     Quantity Supplied after Considering Pollution Cost = 30,000, 35,000, 40,000, 45,000, 50,000, 55,000, 60,000
Economics MPB (Marginal Private Benefit) =20-4Q (like a Demand Equation). MPC (Marginal Private Cost) = 4+2Q (like a Supply Equation). MEB (Marginal External Benefit) = 0 (an external benefit is a positive externality). MEC (Marginal External Cost) = 0.5Q(an external cost is a negative externality). Suppose Power for Health Earth owned the rights to pollute the atmosphere of the City of Atlanta, and it is negotiating with concerned residents willing to pay the company (Great Power) to produce less coal energy. For the 8th unit of coal energy, determine the range within which payment would be acceptable to Great Power and the concerned residents. %3D 1.) Show the following in the graph: a. the 8th unit b. the unit price Great Power would take c. the unit price the concerned residents would раy PLEASE HELP
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