Principles Of Economics, Student Value Edition Plus Mylab Economics With Pearson Etext -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134419381
Author: CASE
Publisher: PEARSON
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Question
Chapter 16, Problem 1.9P
To determine
What happens when the government imposes a per-unit tax on the firm amounting equal to the marginal damage cost.
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If production of a good is known to create external benefits
a. Those benefits are larger than those received by the consumers of that good
b. Those benefits are smaller than those received by the consumers of that good
c. Those benefits are the same as those received by the consumers of that good
A firm has a division that produces chemical Y, whose average total costs are ATC = 50 + 2Q (where Q is the quantity of Y), and a marketing division that adds its own average total costs of ATC = 20 + 3Q. There is no external market price of Y.
What should be the transfer price?
Answer all three questions:
The federal government decides to require that automobile manufacturers install new anti-pollution equipment that costs $2,000 per car.
Under what conditions can carmakers pass almost all of this cost along to car buyers?
Under what conditions can carmakers pass very little of this cost along to car buyers?
Explain your answers.
Chapter 16 Solutions
Principles Of Economics, Student Value Edition Plus Mylab Economics With Pearson Etext -- Access Card Package (12th Edition)
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- The market for pens in Howards is perfectly competitive with no externalities. Market demand is given by Q=165-P. Market Supply is given by Q=P-16.What is total Surplus in this market?arrow_forwardConsumption of a good creates a positive externality. Marginal costs are 0.5q + 60, marginal benefits are 100 – 1.5q and marginal social benefits are 100 – 0.5q. The subsidy required to correct this externality is equal to ________ dollars per unit.arrow_forwardSuppose that a chemical manufacturing plant is releasing nitrogen oxides into the air, and these emissions are associated with health and ecological damages. Economists have estimated the following marginal costs and benefits for the chemical market, where Q is monthly output in thousands of pounds and P is price per pound. MSB = 50 – 0.4Q; MSC = 2 + 0.4Q; MEB = 0; MEC = 0.2Q. Find the dollar value of a product charge that would achieve an efficient solution.arrow_forward
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