Microeconomics For Today (MindTap Course List)
9th Edition
ISBN: 9781305507111
Author: Irvin B. Tucker
Publisher: Cengage Learning
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Textbook Question
Chapter 14, Problem 5SQ
The
- a. voluntarily incur costs to reduce its pollution.
- b. produce at output rate Q3.
- c. produce at output rate Q2.
- d. produce at output rate Q4.
EXHIBIT 6 Private and
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Soybeans are produced and sold in a perfectly competitive market. The fertilizers used in soybean production generate a negative externality by seeping liquid contaminants into local rivers. The local rivers are, as a result, suffering.
(a) Draw a correctly labeled graph of the soybean market, and show each of the following.
(i) The marginal private cost, labeled MPC
(ii) The marginal social cost, labeled MSC
(iii) The marginal social benefit, labeled MSB
(iv) The market equilibrium quantity, labeled Qc
(v) The socially optimal quantity, labeled Qs
(vi) The area of the deadweight loss, shaded completely
(b) Assume the government sets a binding price floor such that the quantity demanded in the market is between Qs and Qc.
(i) What will happen to the quantity produced?
(ii) Will the price floor reduce the deadweight loss? Explain.
(c) Assume instead of a price floor, the government decides to impose a lump-sum tax. What will happen to the socially optimal quantity? Explain.
(d) Assume…
The market for perfume is characterized by:
MPB=200-Q
and
MPC= 3Q
with a marginal social benefit of -$12 caused by the others smelling the perfume. The externality is ______ and on the _____ side of the market. The inefficient quantity is ______ and the price is _____. The allocatively efficient quantity in the market is ______. If the government were to correct the externality, it would _______ the market by $______ per unit of perfume.
Word Bank:
negative, demand, 50, 150, 47, tax, 12, positive, supply, subsidy
Topic: Externality - Pigou
i need part d,e,f
Chapter 14 Solutions
Microeconomics For Today (MindTap Course List)
Ch. 14.2 - Prob. 1.1GECh. 14.2 - Prob. 1.2GECh. 14.2 - Prob. 1.3GECh. 14.2 - Prob. 2.1GECh. 14.2 - Prob. 2.2GECh. 14.2 - Prob. 2.3GECh. 14 - Prob. 1SQPCh. 14 - Prob. 2SQPCh. 14 - Prob. 3SQPCh. 14 - Prob. 4SQP
Ch. 14 - Prob. 5SQPCh. 14 - Prob. 6SQPCh. 14 - Prob. 7SQPCh. 14 - California once proposed legislation that would...Ch. 14 - Prob. 9SQPCh. 14 - Prob. 10SQPCh. 14 - Prob. 11SQPCh. 14 - Prob. 12SQPCh. 14 - Prob. 13SQPCh. 14 - Prob. 14SQPCh. 14 - Prob. 15SQPCh. 14 - Prob. 16SQPCh. 14 - Prob. 1SQCh. 14 - Prob. 2SQCh. 14 - Prob. 3SQCh. 14 - Prob. 4SQCh. 14 - The perfectly competitive profit-maximizing firm...Ch. 14 - Prob. 6SQCh. 14 - Prob. 7SQCh. 14 - Prob. 8SQCh. 14 - Prob. 9SQCh. 14 - Prob. 10SQCh. 14 - Prob. 11SQCh. 14 - Prob. 12SQCh. 14 - Prob. 13SQCh. 14 - Prob. 14SQCh. 14 - Prob. 15SQCh. 14 - Prob. 16SQCh. 14 - Prob. 17SQCh. 14 - Prob. 18SQCh. 14 - Prob. 19SQCh. 14 - Prob. 20SQ
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