In the case of a positive externality: The private market produces too much of the good...
In the case of a positive externality:
The private market produces too much of the good
The market price is below the efficient price
Efficiency requires that the government impose a tax
Market price reflects the social costs of production
Efficiency requires that the government impose a subsidy
Homework Answers
Efficiency requires that the government impose a subsidy
(When there is positive externality, then the private market produces too little of the good so subsidy should be given to increase the quantity and achieve efficiency.)
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In the case of a positive externality:
The private market produces too much of the good...
Suppose that there is a positive externality in the market for pizza rolls. The graph below...
Suppose that there is a positive externality in the market for pizza rolls. The graph below shows the supply and demand curves for pizza rol 144 13+ MSB) Price of pizza rolls 1 2 3 4 5 6 7 8 Quantity of pizza rolls 9 10 11 12 13 14 4. What is the market equilibrium? 5. What is the market price? 6. What is the optimal quantity? 7. What should the government do in order to ensure the market...
12. In the market for really good ideas, the private benefits of one really good idea...
12. In the market for really good ideas, the private benefits of one really good idea (from speaker's fees, book sales, etc.) is $1 million, the social benefits of that idea is $1 billion, then: A. The good idea has external benefit, government should use tax to compensate for the externality. B. The good idea has external benefit, government should use subsidy to compensate for the externality. C. The good idea has external cost, government should use tax to compensate...
Paragraph Styles Unit 8 - Market Failures: Externalities, public goods, natural resources The production of coffee...
Paragraph Styles Unit 8 - Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. MSC MPC The environmental damages caused by throwing away the coffee pods is an example of a:1 Vertical (Value) Axis Major Gridlines a. Positive externality b. Negative externality c. Private costs d. Private benefits Consider the market for coffee...
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in...
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. The environmental damages caused by throwing away the coffee pods is an example of a: a Positive externality (6. Negative externality c. Private cost d. Private benefit Consider the market for coffee in the graph to the right. 1. Left unregulated, what...
please give all the answers. dont need explanations too much 14. If a market is in...
please give all the answers. dont need explanations too much
14. If a market is in equilibrium, then we know that price equals marginal cost because a. the market demand curve reflects marginal cost. b. marginal cost never changes. c. the market supply curve reflects marginal cost. d. every firm has the same costs. e. firms are required by law to equate marginal cost to price. 15. A positive externality raises a. marginal social benefits above marginal private benefits. b....
Using a supply-demand diagram, illustrate a: a. negative externality b. Positive externality c. in which of the above would the market, if left alone, produce too much of the good?
Using a supply-demand diagram, illustrate a: a. negative externality b. Positive externality c. in which of the above would the market, if left alone, produce too much of the good?
61. A positive externality ________. a. gives rise to external benefits b. imposes an additional cost...
61. A positive externality ________. a. gives rise to external benefits b. imposes an additional cost on society c. leads to a higher economic profit d, leads to increasing returns to scale 62. If the production of a good involves positive externalities, ________. a. the average cost of production of the good in the long run is zero b. the variable cost of production of the good is zero c. the market price of the good is higher than its...
QUESTION 18 Someone smoking in a crowded room is an example of: a positive production externality. a negative productio...
QUESTION 18 Someone smoking in a crowded room is an example of: a positive production externality. a negative production externality. a negative consumption externality. not an externality. QUESTION 19 The cyclical deficit is the portion of the deficit created by business cycle fluctuations in GDP. that is the result of nondiscretionary federal spending. the result of discretionary federal spending- that would exist if the economy were at potential GDP. QUESTION 20 A subsidy paid to buyers to correct a market...
To correct for positive externalities, the government should A) do nothing, since no harm is done...
To correct for positive externalities, the government should A) do nothing, since no harm is done by positive externalities B) Levy a tax on the output of the good or service C) pay a subsidy equal to the marginal external benefit D) impose a price ceiling on the good to discourage its production E) impose a price floor on the good at which the marginal private benefit equals the marginal social cost
If the production of a good generates a positive externality, then: Multiple Choice production of the...
If the production of a good generates a positive externality, then: Multiple Choice production of the good is harmful. there will be deadweight loss at the market equilibrium quantity. total economic surplus will be maximized at the market equilibrium quantity. the government should tax producers of the good.
Suppose that there is a positive externality in the market for pizza rolls. The graph below shows the supply and demand curves for pizza rol 144 13+ MSB) Price of pizza rolls 1 2 3 4 5 6 7 8 Quantity of pizza rolls 9 10 11 12 13 14 4. What is the market equilibrium? 5. What is the market price? 6. What is the optimal quantity? 7. What should the government do in order to ensure the market...
12. In the market for really good ideas, the private benefits of one really good idea (from speaker's fees, book sales, etc.) is $1 million, the social benefits of that idea is $1 billion, then: A. The good idea has external benefit, government should use tax to compensate for the externality. B. The good idea has external benefit, government should use subsidy to compensate for the externality. C. The good idea has external cost, government should use tax to compensate...
Paragraph Styles Unit 8 - Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. MSC MPC The environmental damages caused by throwing away the coffee pods is an example of a:1 Vertical (Value) Axis Major Gridlines a. Positive externality b. Negative externality c. Private costs d. Private benefits Consider the market for coffee...
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. The environmental damages caused by throwing away the coffee pods is an example of a: a Positive externality (6. Negative externality c. Private cost d. Private benefit Consider the market for coffee in the graph to the right. 1. Left unregulated, what...
please give all the answers. dont need explanations too much
14. If a market is in equilibrium, then we know that price equals marginal cost because a. the market demand curve reflects marginal cost. b. marginal cost never changes. c. the market supply curve reflects marginal cost. d. every firm has the same costs. e. firms are required by law to equate marginal cost to price. 15. A positive externality raises a. marginal social benefits above marginal private benefits. b....
QUESTION 18 Someone smoking in a crowded room is an example of: a positive production externality. a negative production externality. a negative consumption externality. not an externality. QUESTION 19 The cyclical deficit is the portion of the deficit created by business cycle fluctuations in GDP. that is the result of nondiscretionary federal spending. the result of discretionary federal spending- that would exist if the economy were at potential GDP. QUESTION 20 A subsidy paid to buyers to correct a market...
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