When the rate of output is at the socially efficient level, _______________. net social value which is equal to total WTP minus total costs is as large as possible the total willingness to pay is as large as possible profit is a large as possible output is as large as possible
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When the rate of output is at the socially efficient level, _______________.
net social value which is equal to total WTP minus total costs is as large as possible
the total willingness to pay is as large as possible
profit is a large as possible
output is as large as possible
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- The socially efficient level of production occurs where the marginal cost curve intersects...Why is it socially efficient to set marginal benefits equal to marginal costs rather than abating until total benefits equal total costs?Positive externality No externality Negative externality Answer Bank The U.S. government decides to Lyle and Julia from The hing company icago house all of its nuclear waste to Los Angeles with their newborn infant who cries the entire way illegally hunts the Coelacanth, material at Cactus Cliff, WY. As a critically endangered fish that is close to extinction with all nuclear waste, there is no fail-safe protection method Jane raises bees to produce honey Ronald, the first in his family to attend for her business, but her bees also college, graduates from medical school pollinate many flowers in the neighborhood where she lives. and decides to return home to work as a doctor in his old neighborhood.
- The market for perfume is characterized by: MPB=200-Q and MPC= 3Q with a marginal social benefit of -$12 caused by the others smelling the perfume. The externality is ______ and on the _____ side of the market. The inefficient quantity is ______ and the price is _____. The allocatively efficient quantity in the market is ______. If the government were to correct the externality, it would _______ the market by $______ per unit of perfume. Word Bank: negative, demand, 50, 150, 47, tax, 12, positive, supply, subsidyConsider the network effects of delivery service by drones in Rwanda. Identify the best example of a positive external benefit generated as new customers use the drone delivery service. As demand increases for delivery service by drones, a.a wider variety of products may be delivered by drone. b.highways may be built to service remote locations. c.social networks may also grow in popularity in Rwanda. d.goods may be damaged during delivery.When equilibrium output in a competitive market is at the socially efficient level: a) only market values are incorporated into marginal benefits to consumers and marginal costs of production. b) net social value is as large as possible. c) the marginal benefit to consumers may exceed or be less than the marginal cost of production. d) total willingness to pay is as large as possible.
- Soybeans are produced and sold in a perfectly competitive market. The fertilizers used in soybean production generate a negative externality by seeping liquid contaminants into local rivers. The local rivers are, as a result, suffering. (a) Draw a correctly labeled graph of the soybean market, and show each of the following. (i) The marginal private cost, labeled MPC (ii) The marginal social cost, labeled MSC (iii) The marginal social benefit, labeled MSB (iv) The market equilibrium quantity, labeled Qc (v) The socially optimal quantity, labeled Qs (vi) The area of the deadweight loss, shaded completely (b) Assume the government sets a binding price floor such that the quantity demanded in the market is between Qs and Qc. (i) What will happen to the quantity produced? (ii) Will the price floor reduce the deadweight loss? Explain. (c) Assume instead of a price floor, the government decides to impose a lump-sum tax. What will happen to the socially optimal quantity? Explain. (d) Assume…Q) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Explain it early. Not solve in excel worksQ) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Solve it early. Not in excel
- Q) Imagine any number of identical boats can fish along the North Carolina coast. The value of fishing (V) per boat as a function of the number of boats (N) is: V = 50 − 5N. The marginal value (MV) to the fishery of an additional boat is: MV = 50 − 10N. For each boat, the costs of fishing (C) are $10. If the fishery were managed in a way that only the socially efficient # of boats are allowed to enter the fishery, what would be the net value (i.e., total value minus total costs) of the fishery? Correctly explain now. Not in excelThe optimal level of output can be achieved by levying a tax on a company producing a negative externality. This should be set a level that is equal to: a. the marginal cost of a curve b. the social marginal cost curve c. the difference between the social marginal cost and the firm’s marginal cost. d. the total of the social marginal cost and the firm’s marginal cost.Suppose that demand for anchovy pizza is given by PD=50−QD, and the supply of anchovy pizza is given by PS=QS. Anchovy pizza smells bad. The bad smell imposes an external cost on anyone near the pizza equal to $5 per pizza. What is the socially efficient quantity of anchovy pizza production?
