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- 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.Commun U ASTRAL15963907 Su Home | Shöreline C E D Multiple Choice O Quantity Refer to the provided supply and demand graph for a product. In the graph, line S is the current supply of this product, while line St is the optimal supply from the society's perspective. One solution to this externality problem is to give consumers a subsidy of the amount FG per unit. tax producers by the amount DE per unit. give producers a subsidy of the amount AB per unit tax consumers by the amount EF per unit Seved SaveThe market for plasticans is perfectly competitive. Market Supply is givenby Q=2P and Market Demand is given by Q=385-2P. Each extra unit ofplastican produced imposes a negative externality of $6. What is themarket quantity?
- Compared to a good with no externalities, a good with a negative externality will appear to have experienced a Increase in Supply ODecrease in Supply Olncrease in Demand i ODecrease in Demand i at each corresponding price.Please see pic attached and awnser this question 2. Show on a diagram how a negative external effect can lead toa situation where marginal social cost will exceed marginalprivate cost at the profit maximising output. Explain briefly howbargaining can lead to an improvement in welfare.Which of the following is likely to generate a negative externality? O Planting a tree O Working for long hours O Consuming vegetarian food O Smoking a cigarette
- BND11.1 Why Do Externalities Cause Deadweight Loss?Suppose Firm A is the anly producer in some market. You are given information about the market demand and marginal cost for Firm As product Firm A's market demand is given by: Q= 60 - P Firm A's marginal cost is given by: MC = 6+Q A) Calculate the profit-maximizing output for Firm A. B) Calculate the profit-maximizing price for Firm A. Calculate what would have been the socially efficient output level produced in this market.Explain the negative externalities by clarifying the drawing
- There are two identified externalities involved with pig farming. What are they?Suppose that the only way to reduce pollution from paper production is to reduce output. The government imposes a tax equal to the marginal harm from the pollution on the monopoly producer. This is illustrated in the diagram to the right where MCP is private marginal cost and MC is social (post-tax) marginal cost. The net increase in social welfare from the imposition of the tax is given by the area: O A. E + F OB. A-E O C. E + B O D. There is a net welfare loss with the imposition of the tax. P P p. $ per ton F EXA D C MCS MR Q, Tons of output per day MCPThe figure below shows the market for water-skiing permits on Shuswap Lake in British Columbia. Every person who wishes to water ski must obtain a permit, which is valid for one day. Suppose that each water skier imposes a $4 negative externality on other people who use the lake. Price of ski permits($) 20 18 16 14 12 10 8 6 4 2 0 Sprivate D private 10 20 30 40 50 60 70 80 90 100 Skiers (permits) per day a. The socially optimal level of water skiing is permits. b. If there is no government intervention in this market, the deadweight loss from ignoring the negative externality would be $ c.Suppose the government imposes a $12 tax on suppliers of water skiing permits. Compared to social optimum, the net ((Click to select) in surplus from this tax is $ . (Hint: The tax overcorrects for the negative externality.)