CENGAGE MINDTAP Homework #6 (Ch 10 & 11) Consider the market for electric cars. Suppose that a electric car manufacturing facility dumps sludge into a nearby river, creating a negative externality for those living downstream from the facility. Producing additional electric cars imposes a constant per-unit external cost of $245. The following graph shows the demand (private value) curve and the supply (private cost) curve for electric cars. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per unit. PRICE (Dollars per unit of electric cars) 700 030 560 400 420 280 210 140 70 0 QUANTITY (Units of electric cars) ng cengage.com The market equilibrium quantity is B Supply (Private Cost) Demand (Private Value) Social Cost units of electric cars, but the socially optimal quantity of electric car production is To create an incentive for the firm to produce the socially optimal quantity of electric cars, the government could impose a per unit of electric cars. units as
CENGAGE MINDTAP Homework #6 (Ch 10 & 11) Consider the market for electric cars. Suppose that a electric car manufacturing facility dumps sludge into a nearby river, creating a negative externality for those living downstream from the facility. Producing additional electric cars imposes a constant per-unit external cost of $245. The following graph shows the demand (private value) curve and the supply (private cost) curve for electric cars. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per unit. PRICE (Dollars per unit of electric cars) 700 030 560 400 420 280 210 140 70 0 QUANTITY (Units of electric cars) ng cengage.com The market equilibrium quantity is B Supply (Private Cost) Demand (Private Value) Social Cost units of electric cars, but the socially optimal quantity of electric car production is To create an incentive for the firm to produce the socially optimal quantity of electric cars, the government could impose a per unit of electric cars. units as
Chapter8: Market Failure
Section: Chapter Questions
Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...
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