Homework Answers
Here, the Socially Optimal Quantity is given by the point of intersection of the Social Cost curve and the Social Value (Demand) Curve. Thus, Socially Optimal Quantity = Q2 and the size of the externality is P1-P3.
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10 In the figure below, what is the size of the externality, and what is the...
Refer to the figure above, which shows domestic supply and demand. If P1 is equal to...
Refer to the figure above, which shows domestic supply and
demand. If P1 is equal to P2 (the world price) plus a tariff, then
the social loss from the tariff is equal to:
A) a + c
B) b
C) P1 ( Q3 - Q2)
D) P2 [(Q2 - Q1) + (Q4 - Q3)]
E) a + b + c
Price Q1 Q2 Q3 Qs Quantity
[1] INote that AC in the Figure below is ATC] For the following perfectly competitive industry...
[1] INote that AC in the Figure below is ATC] For the following perfectly competitive industry (market) and firm below, assume that P1 $6.80, P2 $3.80, Q1 1200, and Q2 870. Calculate parts (a) (h) below: Indvidual firm Price Industry Price MC Ms AR-MR MS2 P1 AC P2 AR2 MR2 Md Industry Output QFirm's Output (a) At Demand/P1, Firm's Total Revenue (TR) (b) At Demand/P1, Firm's Average Total Cost (ATC) use AC on graph (c) At Demand/P1, Profit (T) (d)...
Figure 14-4 The figure below depicts the cost structure of a firm in a competitive market...
Figure 14-4 The figure below depicts the cost structure of a firm in a competitive market Price „ATC Ps MC 1 AVC 1 1 11 VIL P2P 1 Q1 Q2 Q3 Q4 Quantity - 34. Refer to Figure 14-4. When market price is P2, a profit-maximizing firm's losses can be represented by the area a. (P3-P) x Q2. b. (P2 - P.) ® Q2 c. At a market price of P2, the firm does not have losses. d. At a...
1. The noise that is associated with bars might be considered a nuisance by some members...
1. The noise that is associated with bars might be considered a nuisance by some members of a neighborhood. Show graphically a market for bars where the number of bars might be greater than the social optimum when noise is considered. Consider the following graph when answering questions 2-5. Price Supply (Private Cost) Social Value Demand (Private Value) Q2 Quantity 2. How many units will the market in equilibrium produce and sell? Q1. b. Q2 Q3. d. Q4. 3. Which...
57. The following figure shows the market supply and demand of a good whose production entails...
57. The following figure shows the market supply and demand of a good whose production entails a $2 negative externality per unit. Refer to the figure above. A total of ________ units of this good will be traded in this market, at the price of ________. a. 20; $2 b. 60; $8 c. 40; $4 d. 80; $6 58. The following figure shows the market supply and demand of a good whose production entails a $2 negative externality per unit....
which shows domestic supply and demand. If P1 is equal to P2 (the world price) plus...
which shows domestic supply and demand. If P1 is equal to P2
(the world price) plus a tariff, then government revenue from the
tariff is equal to: A) a + c B) b C) P1 ( Q3 - Q2) D) P2 [(Q2 - Q1)
+ (Q4 - Q3)] E) a + b + c
Price Q1 Q2 Q3 Qs Quantity
T А 1 Price, Cost P4 a P3 P2 B Pi Quantity 0 Q1 Q2 If...
T А 1 Price, Cost P4 a P3 P2 B Pi Quantity 0 Q1 Q2 If a positive externality exists then the socially optimal price is OP2 OP3 Op4 OP1
Price of electricity Demand QQ4 Quantity of electricity Coal burning utilities release sulfur dioxide and nitric...
Price of electricity Demand QQ4 Quantity of electricity Coal burning utilities release sulfur dioxide and nitric acid which react with water to produce acid rain. Acid rain damages trees and crops and kills fish. Because the utilities do not bear the cost of the acid rain, they overproduce the quantity of electricity. This is illustrated in the Figure above. (Hint: Demandan> Marginal benent: 5,"> Marginal Private Cost: 52**> Marginal Social Cost] Refer to the Figure above. Sy represents the supply...
Homework (Ch 10) 3. The effect of negative externalities on the optimal quantity of consumption Consider the market...
Homework (Ch 10) 3. The effect of negative externalities on the optimal quantity of consumption Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory Producing an additional ton of bolts imposes a constant external cost of $140 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for bolts. Use the purple points (diamond...
Figure 14-4 The figure below depicts the cost structure of a firm in a competitive market....
Figure 14-4 The figure below depicts the cost structure of a firm in a competitive market. Price ATC MC OPS Y 111 AI XAVC II- VIII NA Avi P2P.Erz ii Q1 Q2 Q3 Q1 Quantity 32. Refer to Figure 14-4. When market price is Ps, a profit-maximizing firm's profits can be represented by the area a. Ps x Q3. b. (Ps - P3) * Q2 c. (Ps - Pq) x Q3. d. When market price is Ps there are no...
Refer to the figure above, which shows domestic supply and
demand. If P1 is equal to P2 (the world price) plus a tariff, then
the social loss from the tariff is equal to:
A) a + c
B) b
C) P1 ( Q3 - Q2)
D) P2 [(Q2 - Q1) + (Q4 - Q3)]
E) a + b + c
Price Q1 Q2 Q3 Qs Quantity
[1] INote that AC in the Figure below is ATC] For the following perfectly competitive industry (market) and firm below, assume that P1 $6.80, P2 $3.80, Q1 1200, and Q2 870. Calculate parts (a) (h) below: Indvidual firm Price Industry Price MC Ms AR-MR MS2 P1 AC P2 AR2 MR2 Md Industry Output QFirm's Output (a) At Demand/P1, Firm's Total Revenue (TR) (b) At Demand/P1, Firm's Average Total Cost (ATC) use AC on graph (c) At Demand/P1, Profit (T) (d)...
Figure 14-4 The figure below depicts the cost structure of a firm in a competitive market Price „ATC Ps MC 1 AVC 1 1 11 VIL P2P 1 Q1 Q2 Q3 Q4 Quantity - 34. Refer to Figure 14-4. When market price is P2, a profit-maximizing firm's losses can be represented by the area a. (P3-P) x Q2. b. (P2 - P.) ® Q2 c. At a market price of P2, the firm does not have losses. d. At a...
1. The noise that is associated with bars might be considered a nuisance by some members of a neighborhood. Show graphically a market for bars where the number of bars might be greater than the social optimum when noise is considered. Consider the following graph when answering questions 2-5. Price Supply (Private Cost) Social Value Demand (Private Value) Q2 Quantity 2. How many units will the market in equilibrium produce and sell? Q1. b. Q2 Q3. d. Q4. 3. Which...
which shows domestic supply and demand. If P1 is equal to P2
(the world price) plus a tariff, then government revenue from the
tariff is equal to: A) a + c B) b C) P1 ( Q3 - Q2) D) P2 [(Q2 - Q1)
+ (Q4 - Q3)] E) a + b + c
Price Q1 Q2 Q3 Qs Quantity
T А 1 Price, Cost P4 a P3 P2 B Pi Quantity 0 Q1 Q2 If a positive externality exists then the socially optimal price is OP2 OP3 Op4 OP1
Price of electricity Demand QQ4 Quantity of electricity Coal burning utilities release sulfur dioxide and nitric acid which react with water to produce acid rain. Acid rain damages trees and crops and kills fish. Because the utilities do not bear the cost of the acid rain, they overproduce the quantity of electricity. This is illustrated in the Figure above. (Hint: Demandan> Marginal benent: 5,"> Marginal Private Cost: 52**> Marginal Social Cost] Refer to the Figure above. Sy represents the supply...
Homework (Ch 10) 3. The effect of negative externalities on the optimal quantity of consumption Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory Producing an additional ton of bolts imposes a constant external cost of $140 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for bolts. Use the purple points (diamond...
Figure 14-4 The figure below depicts the cost structure of a firm in a competitive market. Price ATC MC OPS Y 111 AI XAVC II- VIII NA Avi P2P.Erz ii Q1 Q2 Q3 Q1 Quantity 32. Refer to Figure 14-4. When market price is Ps, a profit-maximizing firm's profits can be represented by the area a. Ps x Q3. b. (Ps - P3) * Q2 c. (Ps - Pq) x Q3. d. When market price is Ps there are no...
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