PRICE2018161412108642Figure 10-3Social ValueSupplyDemand,2 4 6 8 10 12 14 16 18 20QUANTITYRefer to Figure 10-3. If the government wanted to tax or subsidize this good to achieve the socially optimal level of output, it wouldO a. introduce a subsidy of $4 per unit.O b. impose a tax of $4 per unit.O c. impose a tax of $2 per unit.O d. introduce a subsidy of $2 per unit.

An externality refers to the impact or consequence of an economic activity that affects individuals…

Answered: PRICE 20 18 16 14 12 10 8 6 4 2 Figure…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter16: Externalities, The Environment, And Natural Resources

Section: Chapter Questions

Problem 2DQ

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Similar questions

Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the marginal social costs. Assume that the marginal private benefits of a firm producing fuel efficient cars are the same as the marginal social benefits. Discuss one wags.r that the government cans ï¬‚y to increase production and sales of fuel efficient cars to the socially desirable amount. Hint: the government is flying to affect production through costs, net benefits.
Classify the following pollution-control policies as command-and-control or market incentive based. A state emissions tax on the quantity of carbon emitted by each firm. The federal government requires domestic auto companies to improve car emissions by 2020. The EPA sets national standards for water quality. A city sells permits to films that allow them to emit a specified quantity of pollution. The federal government pays fishermen to preserve salmon.
45 40 35 30 25 20 P ($) Social cost Supply 15 10 Demand 5 0 0 10 20 30 40 50 60 70 80 90 100 wanted to tax or subsidize this good to achieve the Refer to the figure above. If the government socially-optimal level of output, it would Select one: O a introduce a subsidy of $10 per unit. O b. impose a tax of $10 per unit. Oo impose a tax of $15 per unit. Od introduce a subsidy of $15 per unit. 8
18. The next few questions are about this generic market with a negative consumption externality. Fill in the welfare table below with the areas associated with each welfare measure. aslhee or batoob A P. 1 F H. G MSB Q, Qi tax that leads to Qo CS PS tax revenue externality total surplus gqg 53 2Abbo20 (p re 9 boagns exrsLU ednsto 75 beLapor ent
QUESTION 6 Figure 10-3 PRICE 000 22222S 20 18 16 14 10 8 6 4 Social Value Demand, 246 8 10 12 14 16 18 20 QUANTITY Refer to Figure 10-3. If the government wanted to tax or Iubsidize this good to achieve the socially optimal level of output, it would a introduce a subsidy of $2 per unit. Supply b. impose a tax of $2 per unit. c. introduce a subsidy of $4 per unit. d, impose a tax of $4 per unit.
Figure 1. The graph depicts the market for plastic containers. Price 16- 14- 12- 10 8- 6 200 500 650 Social Cost Private Cost Demand Quantity Refer to Figure 1. In order to reach the social optimum, the government could O offer a subsidy of $8 per unit on the production of plastic containers. O impose a tax of $8 per unit on the production of plastic containers. O offer a subsidy of $4 per unit on the production of plastic containers. O impose a tax of $4 per unit on the production of plastic containers.
Suppose that elementary education creates a positive externality. If the government does not subsidize education, then Select one: O a. the equilibrium quantity of education is optimal O b. the equilibrium quantity of education will be less than the socially optimal quantity of education O c. the equilibrium quantity of education will be equal to the socially optimal quantity of education O d. the equilibrium quantity of education will be greater than the socially optimal quantity of education Next page o search ..
11. Compared to a good with no externalities, a good with a negative externality will appear to have experienced a OIncrease in Supply ODecrease in Supply Olncrease in Demand ODecrease in Demand at each corresponding price...
Price 24 20 16 12 1 1 T M 20 28 O Select one: O a Price floor of $20 O b. Per unit subsidy to consumers of $8 Oc. Per unit tax on producers of $8 d. Price Celing of $12 K 36 MSC MPC MSB Quantity If the government decides to intervene in this market, which of the following would lead to a socially optimal outcome?
Externalities: End of Chapter Problem In Chapter 6, we said that taxes create deadweight losses. When we tax goods with external costs, should we worry about deadweight losses? Why or why not? Any deadweight losses O should not conern us. Deadweight losses are the result of transactions that no longer occur and the problem with negative externalities is that too many transactions occur. O should concern us. If there is a negative externality associated with a good, the deadweight loss from a tax simply exacerbates society's welfare costs. from a tax are counter-productive. Why would we tax goods with negative externalities when the remedy for a negative externality is a subsidy? should concern us. Deadweight losses sound bad because they are bad; we should always avoid deadweight losses.

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