27 of 60 Price $1.90 1.80 Supply (Private + Public Costs) Supply (Private Costs 1.70 1.60 1.50 1.35 D 35 38 42 58 Quantity This graph represents the alcohol industry. The socially optimal price and quantity are ○ $1.35 and 58 units, respectively. $1.60 and 42 units, respectively. O $1.90 and 38 units, respectively. $1.80 and 35 units, respectively.
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- This graph represents the tobacco industry. IPrice 16 14 Social Cost 12 10 Private Cost 8 6 4 Demand 200 500 650 Quantity a) Without any government intervention, what is the market determined price and quantity? b) What is the price of the externality? c) What is the socially optimal price and quantity? d) What should the government do (impose a tax or provide a subsidy) to internalize this externality? What is the amount of the the corrective tax/subsidy needed to be to move the outcome from the market equilibrium to the socially-optimal outcome?Marginal Benefit (MB) MBBETA to Firm MBALPHA Tax = $100 25 50 75 100 Emissions (tons) Figure 16.5 Figure 16.5 shows the marginal benefits of emitting pollution for the only two chemical companies in an industry, Alpha Chemicals and Beta Chemicals. Before any tax on pollution emissions is imposed, each company views pollution as being free. Refer to Figure 16.5. The government decides to impose a tax on pollution of $100 per ton of emissions. Which of the follow are true? (Select all that are true) O a. As a result of the tax, the total emissions will decrease by 50 units O b. As a result of the tax, both firms will decrease emissions by the same amount O c. As a result of the tax, Alpha will cut more emissions than Beta O d. Before the tax, Beta produced more emissions than Alpha O e. The amount of tax collected is $2500 O f. After the tax, Beta will produce 50 tons more than Alpha Og. The tax was intended to decrease production by 50 units for each firm. O h. As a result of the tax,…Only typed answer You are an industry analyst that specializes in an industry where the market inverse demand is P = 100 - 3Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 14Q. Instruction: Round your answers to the nearest two decimal places. a. What is the socially efficient level of output? units b. Given these costs and market demand, how much output would a competitive industry produce? units c. Given these costs and market demand, how much output would a monopolist produce? units d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output. Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit. Pollution taxes…
- 20 Supply Social Value 18 16 14 PRICE ㄓ 12 10 8 6 4 2 Demand 24 6 8 10 12 14 16 18 20 QUANTITY The graph indicates what type of externality? Positive In this type of market failure, is the quantity over-provided or under- provided? By how much? What is the socially optimal price? over-provided by 2 units $10 What is the socially optimal quantity? 10 units What is the market failure price? $8 What is the market failure quantity? 8 unitsQuestion 1 Price $1.90 1.80 1.70- 1.60 1.50 1.35 35 38 42 Supply (Private+ Public Costs) 58 Supply (Private Costs) Quantity Refer to the figure above. This graph represents the tobacco industry. The socially optimal price and quantity are O $1.90 and 38 units, respectively. O $1.80 and 35 units, respectively. O $1.60 and 42 units, respectively. O $1.35 and 58 units, respectively.0 Figure 4 PRICE (Dollars per unit) 9.00 8.40 6.21 4.50 Social Cost Supply 48 60 76 100 QUANTITY (Units of tobacco) O $6.21 and 76 units, respectively. O $9.00 and 60 units, respectively. O $8.40 and 48 units, respectively. O $4.50 and 100 units, respectively. Demand Refer to Figure 4. This graph represents the tobacco industry. The socially optimal price and quantity are
- The table below shows the demand for pollution permits to emit hydrocarbons in a particular industrial park. Each permit allows the owner to release one tonne of pollutants into the atmosphere. Price perPollution Permit Quantity of Permits $4,500 75 4,000 150 3,500 225 3,000 300 2,500 375 2,000 450 1,500 525 a. If no fee for a pollution permit were charged, how many tonnes of pollutants would be discharged into the atmosphere, assuming a straight-line demand curve? Quantity: tonnesb. Suppose government were to set a fee of $3,500 per pollution permit. How many tonnes of pollutants would now be dumped? What is the total revenue received by government? Quantity: tonnes Total revenue: $ c. Suppose that a new technology allows for a significant reduction in hydrocarbons at a relatively low cost so that the demand for pollution permits in the industrial park drops by 150 tonnes. Assuming that government holds the permit fee at $3,500, how many tonnes of…P ($) Supply 100 90 80 70 60 50 Social benefit 40 30 20 10 Demand 0 5 10 15 20 25 30 35 40 45 50 Refer to the figure above. If the government wanted to tax or subsidize this good to achieve the socially-optimal level of output, it would Select one: a. impose a tax of $30 per unit. O b. introduce a subsidy of $30 per unit. c. impose a tax of $50 per unit. d. introduce a subsidy of $50 per unit.a. Place point A at the equilibirum outcome. Place point B at the socially efficient outcome. Market for cigarettes 10 Marginal social cost В Marginal private cost (supply) 8 A 7 Demand 4 3 1 30 60 90 120 150 180 210 240 Quantity of cigarettes (millions of packs) CO LO Price ($)
- Below is the hypothetical supply and demand diagram for iron supplements in Brazil with positive externalities. 1. Move Ej to the market's equilibrium. 2. Move E2 to the socially optimal equilibrium. Market for Iron Supplements 5.0 E 1 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 D social D internal 0.5 0.0 100 200 300 400 500 600 700 800 900 1,000 Quantity (thousands) Price ($)16. A pharmaceutical company develops a vaccine against malaria, a disease that kills large numbers of people worldwide. This vaccine market presents Opositive externalities Onegative externalities Opublic goods Osocial cost and as a result Othe private demand for vaccine is greater than the social demand Othe social demand for vaccines is greater than the private demand Othe market will result in an over production of vaccines Othe price of the vaccine will be too low to generate profitfor the firmQuantity Private Value Private Cost External Cost (Units) (Dollars) (Dollars) (Dollars) 6 6 6 6 6 6 6 1 2 3 4 5 6 7 Table 10-4 46 44 42 40 38 36 34 21 24 27 30 33 36 39 Refer to Table 10-4. Which of the following policies would move the market from the market equilibrium to the socially optimal equilibrium? O a. A tax of $6 per unit of output O b. A tax of $4 per unit of output O c. A subsidy of $4 per unit of output O d. A subsidy of $6 per unit of output