Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the marginal
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Chapter 13 Solutions
Principles of Economics 2e
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- Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.arrow_forwardShow 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.arrow_forwardThe figure below shows supply and demand for planting trees, based on private costs and benefits. Trees sequester carbon, meaning that they help counteract pollutants that contribute to climate change. Price of trees (S) 22114 20 18 16 12 10 8 6 4 2 0 MCpvt D-MBMB, 10 20 30 40 50 60 70 80 90 100 Quantity of trees Tools Social Cost DWLarrow_forward
- According to the Coase theorem,a. private actors can reach agreement to solve theproblem of externalities without the government.b. corrective subsidies are the best policy to solvethe problem of positive externalities.c. negative externalities are a problem for societybut positive externalities are not.d. when two private actors amicably solve theproblem of externalities, they shift the problem toa third partyarrow_forwardDon't give handwritten answers please and Do bo a. Draw the demand, supply, and social marginal cost curves on the same graph. b. What is the socially efficient quantity of the good? Show your work.arrow_forwardQuestions 12 & 13 relate to the following graph: $ P3 P₂ 12 13 P₁ The graph best represents: Q₁ Qo a. Negative production externality b. Positive production externality c. Negative consumption externality d. Positive consumption externality According to the graph, which price and quantity combination represents the social optimum? a. P₁, Q₁ b. P₂, Q₁ C. P₁, Qo d. P₂, Qo Social Cost A A Private Cost Demand Quantity B B D C Darrow_forward
- Refer to the above table and answer the question on the basis of the given information for a public good. TH Quantity 1 PR $10 Ps $8 2 7. 7 3 5 6 4 3 5 1 4 PRand Psare the prices that Rafael and Sarah, respectively, are willing to pay for the marginal unit of a public good, rather than do without it. Rafael and Sarah are the only members of society. Now suppose the public good can be provided by the government at a constant marginal cost of $10. The optimal quantity of the public good is: 1) 1 unit. 2) 2 units. 3) 3 units. 4) 4 units. vonlstarrow_forwarda. How much does consumers surplus rise when the government completely subsidizes bike trips? B. How much do external benefits increase when the government completely subsidized bike trip? C. Do Social benefits outweigh the social costs of this subsidv? By how mucharrow_forward
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