BN11.1 (a) (b) Case: Consider a market in which a firm has monopoly power. Suppose in addition that the firm produces under the presence of an externality. Questions: (a) Does the externality necessarily lead to a greater misallocation of resources in the presence of a negative externality? (b) A positive externality?

BN11.1 (a) (b) Case: Consider a market in which a firm has monopoly power. Suppose in addition that the firm produces under the presence of an externality. Questions: (a) Does the externality necessarily lead to a greater misallocation of resources in the presence of a negative externality? (b) A positive externality?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 42P: Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the...

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Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?
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QUESTION 10 Suppose that a firm in a competitive market produces electricity by burning coal. The production process creates a negative externality of air pollution. The firm only cares about its private benefits and costs so it will produce a quantity where O the price of electricity it is paid equals the marginal private cost of producing electricity O the marginal value of electricity to society equals the marginal social cost to society the cost of the externality is maximized O the transaction costs of private bargaining are minimized
Explanation it correctly Q)Is nutella positive externalities or negative?
17-4 Outline government policies designed to promote the produc- tion and consumption of goods that generate positive externalities9. (Positive Externalities) The value of a home depends in part on how attractive other homes and yards in the neighborhood are. How do local zoning ordinances try to promote land uses that generate external benefits for neighbors?
мсо 46 If the units of output purchased in a competitive market generate positive externality benefits, we can infer that the competitive equilibrium outcome is such that: A the market price is equal to marginal social benefit B marginal private cost is greater than the market price C I do not want to answer this question. D marginal private cost is greater than marginal private benefit E marginal private cost is less than marginal social benefit F marginal private benefit is greater than marginal social benefit