Explanation 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 equipment, as well as labor used for the production process. The externalities are the additional costs and benefits incurred to the third person who is not actually involved in the economic transaction. When the additional costs are incurred, it is known as the negative externalities, and when it is benefits, they are known as the positive externalities. The property rights allocate the right to maintain free atmosphere or the right to pollute. Those who have the property right can sue the other in the court. But there are chances of negotiation between the right owner and the other party to maintain an optimal level between them. Here, the case is the number of cigarettes smoked by Jack and the number of days lost for Jill due to externality. Jack has the property right to smoke. The cost and benefits are given as follows: Quantity of cigarettes Total value to Jack of cigarettes Days of life lost Total Value of Jill of days lost 1 $50 1 $30 2 90 2 60 3 120 3 90 4 140 4 120 5 150 5 150 Option (c): The socially efficient number of flights is obtained at the point where the marginal cost is equal to the marginal social benefit...

10th Edition

ISBN: 9781337613040

Author: Tucker

Publisher: Cengage Learning

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Question

Chapter 14, Problem 20SQ

To determine

The socially efficient number.

Expert Solution & Answer

Chapter 14 Solutions

Economics For Today

Ch. 14.2 - Prob. 1.1GE Ch. 14.2 - Prob. 1.2GE Ch. 14.2 - Prob. 1.3GE Ch. 14.2 - Prob. 2.1GE Ch. 14.2 - Prob. 2.2GE Ch. 14.2 - Prob. 2.3GE Ch. 14.2 - Prob. 2.4GE Ch. 14 - Prob. 1SQP Ch. 14 - Prob. 2SQP Ch. 14 - Prob. 3SQP

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