Chapter 17, Problem 14PAE

If there are no externalities or market power and all markets are in equilibrium, what conclusions can we draw from this in economic theory?

In the past, some counties and countries have imposed taxes on sugar, saturated fats, and food made with those ingredients as a way to reduce consumption of those foods. Assume the government imposes a unit tax on all chocolate. Answer the following questions Is there an externality from consuming chocolate? Explain why or why not. Use a correctly labeled graph to show what happens in the market for chocolate as a result of the unit tax. On your graph, show the market equilibrium before and after the tax (i.e. show the equilibrium prices and quantities.) Show graphically what happens to consumer surplus and producer surplus after the tax (you may need a separate graph to show this.) Will consumers be able to shift this tax to sellers? If yes explain why/how. If no explain why not. Based on your answer to c, who will bear the incidence of this tax? Show this on a graph. How will consumers respond to the tax on chocolate? How will candy companies respond strategically to the tax on…

Use the graph attached below as a starting point (either download it or print it out). Add curves, labels, etc. to this graph in order to show the following: 1. Show that this good has a $4/unit negative externality (external cost), such as pollution. 2. Shade the area that represents the Deadweight Loss (lost gains from trade) caused by the external cost. 3. Show a tax or subsidy wedge (whichever you think is appropriate) that will solve the problem of the external cost. 4. Show the socially optimal level of production that the Pigouvian tax or subsidy above will help the market to achieve. You may use software or pencil and paper to complete this graph. Upload it here when you are done.

How externalities and their impact the economy? explain the negative and the positive externalities and how it affects the market.

Based on the graph:a. In this market, how much is the external cost from the production of each unit of tobacco? To reach the social optimum, should the government provide a subsidy or impose a tax?  If so, how much tax or subsidy? b. Is there a deadweight loss in this market? If so, why is there a deadweight loss?

The chart above shows the market for polio vaccine in Pakistan. This vaccine provides external benefits because vaccinating one person reduces the likelihood of other people catching the disease. a.) If there is a competitive market and there is no government intervention, what will be the amount of vaccine? b. ) If a foundation takes over the cost of the vaccine, what will be the amount of vaccine used in the market? How will the market efficiency change? Why?

Explain the difference between a positive externality and a negative externality. Can both types of externalities result in market failure? Why or why not?

In an article in the agriculture magazine Choices​, Oregon State University economist JunJie Wu made the following observation about the conversion of farmland to urban​ development:   Land use provides many economic and social​ benefits, but often comes at a substantial cost to the environment. Although most economic costs are figured into land use​ decisions, most environmental externalities are not. These environmental​ "externalities" cause a divergence between private and social costs for some land​ uses, leading to an inefficient land allocation. For​ example, developers may not bear all the environmental and infrastructural costs generated by their projects. Such​ "market failures" provide a justification for private conservation efforts and public land use planning and regulation.   What does the author mean by market failures and inefficient land use allocation​? Explain why the author describes inefficient land allocation as a market failure. Illustrate your argument with a…

Give an example of a positive externality and an example of a negative externality that exist in the economy? Share your thoughts in a paragraph