d) $21,000
(With external benefits, Marginal social cost (MSC) curve will lie to the right of S with $30 below at each quantity. So, MSC will intersect D at quantity 700 units. Thus, the most 3rd parties would be willing to pay = $30*700 = $21,000)
Price (S) 100T 500 Quantity Figure 4 15. Refer to Figure 4. Suppose there is a...
Price ($) 100T Social Cost ! Private Cost 50 Quantity Figure 7 23. Refer to Figure 7, which shows a market in which the production of the good generates a $45 external cost. Which area(s) represent(s) the deadweight loss associated with the competitive market outcome? a) A b) B c) C d) B+C 24. Refer to Figure 7, which shows a market in which the production of the good generates a $45 external cost. Which of the following policies would...
Refer to Figure 4. Suppose there is a $30 external benefit associated with the production of this good. How many of the following policies lead to the efficient outcome? • A $60 price floor • A $30 price ceiling • A $30 tax on consumers • A $30 subsidy to consumers a) None of these policies lead to the efficient outcome. b) 1 of these policies leads to the efficient outcome. c) 2 of these policies...
Price (S) 50 Quantity Figure 3 12. Refer to Figure 3. Assume that production of this good generates a $30 per unit external cost. How many of the following regulations would lead to the efficient outcome? • A price ceiling at $30 • A price floor at $60 • A per-unit tax of $30 • A per-unit subsidy of $30 a) 1 b) 2 c) 3 d) 4 13. Refer to Figure 3. Assume that production of this good generates...
Price S2 S1 Quantity Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and 52 (point B). Assume that Motorcycles are a normal good. If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good), the equilibrium could move to which point? ΟΑ) Α ОВ) в 0 O C) c OD E Panel (a)...
Price (s) 10 50 Quantity Figure 6 21. Refer to Figure 6. Suppose that the consumption of this good generates a $3 external cost. How many units are consumed in equilibrium absent government regulation? a) 30 b) 40 c) 50 d) 60 22. Refer to Figure 6. Suppose that the consumption of this good generates a $3 external cost. How much total surplus is generated from the transaction of the 20th unit? a) $0 b) $1.50 c) $3 d) $4.50
Figure 10-12 Price Supply External benefit Line 2 Line 1 ei 22 Quantity Refer to Figure 10-12. An alternative label for the quantity , would be O EXTERNAL O MARKET O OPTIMUM O PRIVATE
14. Refer to Figure 3. Assume that production of this good generates a $30 per unit external cost. How much total surplus is generated in this market at the efficient outcome? a) $375 b) $675 c) $1,250 d) $2,175 Price (S) 50 50 Quantity Figure 3
We are considering a market with marginal cost of P=100+2Q and a demand of P=500-2Q. Use that information to answer the following questions. a. Find the market equilibrium (price and quantity in the market). b. Find producer and consumer surplus. c. Now imagine production of this good created a negative externality of 1$ per unit of output. Find the socially optimal outcome (price and quantity) taking this externality into account. d. Find consumer and producer surplus at the socially efficient...
Price (S 100 50 25 D 500 Quantity Figure 5 20. Refer to Figure 5. How many of the following policies would a firm with market power oppose? Assume that the firm will oppose policies that lead to a reduction in producer surplus. A $60 price floor A $60 price ceiling A $30 tax on consumers A $30 subsidy to consumers a) A firm with market power will oppose 1 of the above policies b) A firm with market power...
Figure 4-20 Refer to Figure 4-20. At a price of $15, a. quantity demanded exceeds quantity supplied. b. there is a shortage. c. there is an excess demand. d. All of the above are correct.