Homework Answers
12) Here the social benefits exceed the private benefit and hence the good has an external benefit. So in order to compensate for the externally the government must introduce subsidy so that the good is produced and the society gets benefit out of it. Government uses taxes when the social costs exceed the private costs and thereby compensate for the externally. Hence the answer is option (B).
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12. In the market for really good ideas, the private benefits of one really good idea...
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
A market supply curve reflects the external benefits of producing a good or service. marginal private...
A market supply curve reflects the external benefits of producing a good or service. marginal private coats of producing a good or service. marginal social costs of producing a good or service. external costs of producing a good or service.
1. Individual A and B have the following marginal benefits for private good X: MBA =...
1. Individual A and B have the following marginal benefits for private good X: MBA = 10 - XA MBg = 10 - XB While the cost of producing each unit is 2 dollarsyi.e., MC = 2). You are asked to: a. On a graph, find the market demand function for private good X (hint: make sure to label the angles, elbows, and corners as needed). b. Find the market equilibrium. e. Find consumer A quantity demanded, and consumer B...
Products that create external benefits are over-consumed because the private benefits exceed the private costs under...
Products that create external benefits are over-consumed because the private benefits exceed the private costs under consumed because consumers only consider the private benefits of consumption O optimally consumed as long as private benefits equal private costs underconsumed because the social costs exceed the social benefits QUESTION 23 The Coase theorem suggests that private bargains will ensure the efficiency of markets even when externalities exist O but only in the presence of government regulation if consumers have more information regarding...
QUESTION 22 Products that create external benefits are over-consumed because the private benefits exceed the private...
QUESTION 22 Products that create external benefits are over-consumed because the private benefits exceed the private costs under-consumed because consumers only consider the private benefits of consumption O optimally consumed as long as private benefits equal private costs O underconsumed because the social costs exceed the social benefits QUESTION 23 The Coase theorem suggests that private bargains will ensure the efficiency of markets even when externalities exist but only in the presence of government regulation if consumers have more information...
Suppose the demand (i.e. the private marginal benefit) for industrial grade stink bombs is given by...
Suppose the demand (i.e. the private marginal benefit) for industrial grade stink bombs is given by P=300-2Q and supply (i.e. the private marginal cost) for is given by P=Q. Also, suppose that the marginal external damage of consuming this product is $60 per stink bomb. a. What is the equilibrium quantity of stink bombs sold and consumed? b. What is the socially optimal equilibrium quantity of stink bombs sold and consumed? c. Considering your answers to (a) and (b), are...
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...
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...
Consider the market for a Hepatitis A vaccine. The market demand or private marginal benefit schedule...
Consider the market for a Hepatitis A vaccine. The market demand or private marginal benefit schedule is given by P = 80 – 0.25Qd, where Qd is the number of vaccines demanded per month and P is the price per vaccination. The market supply for the vaccine is (Private marginal cost schedule) is P = 15 + 0.4Qs, where Qs is the number of vaccines supplied per month. a. Draw a graph of the market and solve the number of...
QUESTION 17 Suppose a firm produces pollution when it generates electricity. The cost of the pollution...
QUESTION 17 Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the private marginal cost. social marginal cost. marginal cost. external marginal cost 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...
A market supply curve reflects the external benefits of producing a good or service. marginal private coats of producing a good or service. marginal social costs of producing a good or service. external costs of producing a good or service.
1. Individual A and B have the following marginal benefits for private good X: MBA = 10 - XA MBg = 10 - XB While the cost of producing each unit is 2 dollarsyi.e., MC = 2). You are asked to: a. On a graph, find the market demand function for private good X (hint: make sure to label the angles, elbows, and corners as needed). b. Find the market equilibrium. e. Find consumer A quantity demanded, and consumer B...
Products that create external benefits are over-consumed because the private benefits exceed the private costs under consumed because consumers only consider the private benefits of consumption O optimally consumed as long as private benefits equal private costs underconsumed because the social costs exceed the social benefits QUESTION 23 The Coase theorem suggests that private bargains will ensure the efficiency of markets even when externalities exist O but only in the presence of government regulation if consumers have more information regarding...
QUESTION 22 Products that create external benefits are over-consumed because the private benefits exceed the private costs under-consumed because consumers only consider the private benefits of consumption O optimally consumed as long as private benefits equal private costs O underconsumed because the social costs exceed the social benefits QUESTION 23 The Coase theorem suggests that private bargains will ensure the efficiency of markets even when externalities exist but only in the presence of government regulation if consumers have more information...
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...
QUESTION 17 Suppose a firm produces pollution when it generates electricity. The cost of the pollution is called the private marginal cost. social marginal cost. marginal cost. external marginal cost 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...
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