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Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

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BuyFindarrow_forward

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 14, Problem 10SQ
Textbook Problem
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According to most economists, reducing automobile emissions to zero would be

  1. a. optimal.
  2. b. inefficient.
  3. c. beneficial.
  4. d. impossible.

To determine

The zero emission in automobiles.

Explanation of Solution

The cost of the production is the costs associated with the production of a commodity in the economy. It includes the cost of the raw materials used for production, the cost of the equipments as well as labor used for the production process. The externalities are the costs or benefits to the third party who is not involved in the economic activity. When the result is additional cost to the individual, it is known as the Negative externality and the benefits are known as the positive externalities.

Option (b):

The social cost and the private cost are the costs associated with the process of production. The private costs are the costs borne by the producer and the social costs are the costs borne by the society. The optimal or efficient level of pollution in the economy is obtained when the marginal social cost equals the marginal social benefit. Thus, when the emission is made zero, it means that there will be economic inefficiency. This means that option 'b' is the correct answer.

Option (a):

The pollution is the negative externality that is created as a result of the process of production...

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Chapter 14 Solutions

Economics For Today
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