Economics For Today
Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 14, Problem 18SQ
To determine

The impact of equal social marginal cost and benefit.

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SCENARIO: Developers of a new housing scheme spend money putting in roads, lighting and clearing land surrounding the scheme. (1) The type of market failure represented by the scenario is a/an a. negative externality b. positive externality c. public good d. asymmetric information (2) The market fails in this scenario because a. no market transaction takes place b. goods are underproduced c. goods are overproduced d. no private provision (3) Solution to the market failure is a. subsidy b. government provision c. taxation d. screening e. signaling (4) The equilibrium quantity is _______the socially efficient quantity. a. greater than b. less than c. equal to (5) The private benefit curve is a. shifts outwards to the social benefit curve b.shifts inwards to the social benefit curve c. remains unchanged (6) The private cost curve is a. shifts outwards to the social cost curve b.shifts inwards to the social cost curve c. remains unchanged (7) The Efficient output is found where the → the…
Which of the following does the producer receive if the market price exceeds the cost of production?   Question 2 options:   a)  Producer surplus   b)  Deadweight loss   c)  External benefit
a. When a firm imposes an external social cost (negative externality), the government should impose a tax on production equal to the externality cost to ensure that the market will achieve the socially optimal outcome. Select one: True False   b. The socially optimal level of emissions of most pollutants is zero. Select one: True False   c. Externalities are only inefficient when they impose a cost. They are not inefficient when they bestow a benefit. Select one: True False
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