In case when there is positive externality in the production of some good, the tariff on this good
a) is an example of dumping
b) can be welfare improving
c) will hurt domestic producers
d) will certainly decrease welfare
d) will certainly decrease welfare
(When there is positive externality, subsidy should be given to increase welfare because there is underproduction. If tariff is imposed then it would reduce production further and will certainly decrease welfare.)
In case when there is positive externality in the production of some good, the tariff on...
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.
6) Efficiency, Welfare & Externalities a) Discuss the notion of externality(s)? b) Are they good or bad from an efficiency point of view? c) Provide some everyday examples of positive and negative externalities with a brief discussion. d) What is a public good? e) Give an example of a pure public good.
HW Tariff: Large Country Case Suppose that there are only two trading countries: one importing country and one exporting country. The supply and demand curves for the two countries are shown below. Prr is the free trade equilibrium price. At that price, the excess demand by the importing country equals excess supply by the exporter. Welfare Effects of a Tariff: Large Country Case Importing Country Exporting Country P A D H b C C PT E PT C F G...
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
I really need help with letter e. If anyone can help 2. Suppose that an imported good is characterized by a negative externality (e.g. national security costs are not taken into account by the world price of the good) The free situation is depicted below where Pw is the world market price Domestic supply Price Pw externality -Pw Domestic demand Q1 02 3 Q4 Quantity Answer the following questions on your answer sheet a. Deadweight losses associated with free trade....
Pollution is an example of a ________ externality. Select one: A. negative production B. positive production C. negative consumption D. positive consumption E. Coasian
1. Small Country Policy Analysis with a Positive Externality. The home country imports steel at a constant world price of 2. Home demand and supply for steel are shown in the top panel of Diagram 1 on the next page. Suppose there is a positive externality associated with steel production, and the marginal social benefit is shown in the bottom panel of Diagram 1. a) Find the values of P, D, Q, consumer surplus, and producer surplus in free trade....
When a positive externality exists, the market is said to fail because it overproduces the good associated with the positive externality. True False
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...
Import tariff in the case of domestic monopoly a) leads to a higher welfare than the equivalent quota b) leads to the lower domestic prices than in the case of free trade c) leads to a lower welfare than the equivalent quota d) leads to the same level of welfare than the equivalent quota