Below is the the market demand curve for reusable water bottles when only the marginal private benefits (MPB) that the owners of reusable water bottles receive are taken into account. Let's say that the government issued vouchers that ensured the reusable water bottle buyers received $10 per bottle. Assume that this will shift the demand curve to the marginal social benefit level (MSB). Move the demand curve to show this change and reposition the Social Equilibrium point to reflect the socially optimal price and quantity. Provide your answer below: 35 32.5 rice
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- Below is the the market demand curve for yard leaf cleaning when only the marginal private benefits (MPB) that the homeowners receive from the clean yard are taken into account. If the government provides a subsidy to yard cleaning companies, equal to $10 per yard, the demand curve will shift and become the same as the marginal social benefit curve (MSB). Move the demand curve to illustrate that. Provide your answer below:Some economists argue that early child care generates an external benefit to society. Consider the following supply-and-demand graph for early childhood education. A. How does the market equilibrium differ from what is best for society? B. If the government was going to provide a per-unit subsidy in this market in order to achieve the socially optimal outcome, how large of a subsidy would the government ne to provide? C. How much in total would the government need to spend in this market each month to achieve a socially optimal outcome? Price ($ per month) Supply $1,300 $1,200 $1,000 $900 Marginal social benefit Marginal private benefit (demand) 23 26 Quantity (millions per month)Some economists claim that early child care generates an external benefit to society. a. What is the market equilibrium? What is the socially optimal outcome? How do they differ? b. The government is planning to provide a per-unit subsidy for child care to achieve the socially optimal outcome. How large should this subsidy be? c. How much is the total government subsidy each month to reach a socially optimal outcome?
- When does a subsidy that benefits consumers result in a more efficient allocation of a resource? A when the good being produced or consumed is not scarce B when the good being produced or consumed generates a negative externality when the good being produced or consumed generates a positive externality D when the equilibrium price of the good is one that consumers don't likeSuppose that the only way to reduce pollution from paper production is to reduce output. The government imposes a tax equal to the marginal harm from the pollution on the monopoly producer. This is illustrated in the diagram to the right where MCP is private marginal cost and MC is social (post-tax) marginal cost. The net increase in social welfare from the imposition of the tax is given by the area: O A. E + F OB. A-E O C. E + B O D. There is a net welfare loss with the imposition of the tax. P P p. $ per ton F EXA D C MCS MR Q, Tons of output per day MCPBelow is the the market demand curve for yard leaf cleaning when only the marginal private benefits (MPB) that the homeowners receive from the clean yard are taken into account. If the government provides a subsidy to yard cleaning companies, equal to $10 per yard, the demand curve will shift and become the same as the marginal social benefit curve (MSB). Move the demand curve to illustrate that. Provide your answer below: Supply 2- Demand 2 4 8 Number of yards (in hundreds) Price per yard (in tens)
- The production of fabric generates toxic effluents related to the dyes used. This is typically disposed of with wastewater, which generates pollution. If the government does not intervene, the market for fabric has an equilibrium price of $250 per roll and an equilibrium quantity of 10,000 rolls. a.How would the socially optimal quantity of fabric compare to the free market equilibrium quantity of 10,000 rolls? Why? b. Using a supply and demand graph show the effect on social welfare of allowing the market for fabric to operate without government intervention. Label all the curves and relevant points on your graph. c. Would a government subsidy or tax help the market achieve the social optimum? Explain. Show the necessary subsidy/tax on your graph. d. Explain how this intervention helps achieve the social optimum and what information would be necessary to implement it.The marginal private benefit (downward sloping) and marginal private cost (upward sloping) curves for the bread market are shown below. If producing bread generates a $1 per unit external benefit in the form of a pleasing aroma, use the line tool to draw the marginal social benefit curve. (Put the endpoints of your curve on the horizontal and vertical axes.) Segment * Undo A Redo x Reset 10 9 80 7 6 5 4 2 1 1 4 5 6 7 8 9 10Which of the following policies could help the government achieve the efficient outcome? Check all that apply. Introduce emission taxes Offer a subsidy to consumers equal to the vertical distance between the marginal private benefit curve and the marginal social benefit curve Implement tradable pollution permits Offer a subsidy equal to the price at the efficient outcome Offer a subsidy to producers equal to the vertical distance between the marginal private benefit curve and marginal social benefit curve
- Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity.Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their private value), the supply of parks (the private cost of producing them), and the social value of parks, including both the private value and external benefits. Use the black point (plus symbol) to indicate the market equilibrium quantity. Next, use the purple point (diamond symbol) to indicate the socially optimal quantity. (?) Supply (Private Cost) Market Equilibrium Socially Optimal Level Social Value Demand (Private Value) QUANTITY OF PARKS PRICE OF PARKSWhat is an externality? How do they affect market efficiency? If an externality is present, where is the socially optimal point of production? Where will the market produce if there is no government intervention? How do we get from the private market equilibrium to the socially optimal one?