None 26↑ Price24222018Supply161412108642Demand Social Value2 4 6 8 10 12 14 16 18 20 22 QuantityHow large would the subsidy need to be to internalize the externality?O Less than $2$2O More than $2O The size of the subsidy cannot be determined from the figure.

The subsidy needed to internalize the externality cannot be determined from the figure alone. It…

Answered: 26 ↑ Price 24 22 20 18 Supply 16 14 12…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 41P: Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once...

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Similar questions

Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
PRICE 20 18 16 14 12 10 8 6 4 2 Figure 10-3 Social Value Supply Demand, 2 4 6 8 10 12 14 16 18 20 QUANTITY Refer to Figure 10-3. If the government wanted to tax or subsidize this good to achieve the socially optimal level of output, it would O a. introduce a subsidy of $4 per unit. O b. impose a tax of $4 per unit. O c. impose a tax of $2 per unit. O d. introduce a subsidy of $2 per unit.
Figure: External Costs Price Social cost Supply E D H G Demand Quantity The distance between point I and point H represents the O price to the consumer external cost O private valuc O social cost
45 40 35 30 25 20 P ($) Social cost Supply 15 10 Demand 5 0 0 10 20 30 40 50 60 70 80 90 100 wanted to tax or subsidize this good to achieve the Refer to the figure above. If the government socially-optimal level of output, it would Select one: O a introduce a subsidy of $10 per unit. O b. impose a tax of $10 per unit. Oo impose a tax of $15 per unit. Od introduce a subsidy of $15 per unit. 8
Externalities: End of Chapter Problem In Chapter 6, we said that taxes create deadweight losses. When we tax goods with external costs, should we worry about deadweight losses? Why or why not? Any deadweight losses O should not conern us. Deadweight losses are the result of transactions that no longer occur and the problem with negative externalities is that too many transactions occur. O should concern us. If there is a negative externality associated with a good, the deadweight loss from a tax simply exacerbates society's welfare costs. from a tax are counter-productive. Why would we tax goods with negative externalities when the remedy for a negative externality is a subsidy? should concern us. Deadweight losses sound bad because they are bad; we should always avoid deadweight losses.
QUESTION 36 Given the diagram below which of the following statements is true? 54.50 400 3.50 300 250 200 150 100 O123 45678 10 11 12 13H 15 Quantity hosandh of doe per mone OA. When the price is $2 there is a surplus of 4 units O B. When the price is $1:50 the quantity demanded is 4 units OC When the price is $3.50 the quantity demanded is 12 units OD. When the price is $3.00 there is a surplus of 4 units QUESTION 37 Which of the following is NOT a reason why countries impose tariffs on imports? O A. Protect domestic industries OB. Retaliation OC National security O D. None of the above QUESTION 38 Which of the following statements is FALSE? OA. The GDP of a country equals the value of final output produced within the borders of that country O B. The GNP of a country equals the value af final output produced using factors owned by residents of the country. OC GDP - net income received from abroad by residents of a nation + GNP O D.GDP represents the most commonly used measure of an…
Considermarketforagoodcharacterizedbythefollowinginverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX.a. Compute the surplus received by consumers and producers.b. Now suppose all manufacturers of this good are to pay a lump tax of $0.10that will be used by the government regulators to defray some of the environmental cost imposed by this good’s production. What will be the new surplus received by consumers and producers?c. Based on your results in part ‘b’ above, how will you evaluate the impact of this tax policy on the society? Explain
11. Compared to a good with no externalities, a good with a negative externality will appear to have experienced a OIncrease in Supply ODecrease in Supply Olncrease in Demand ODecrease in Demand at each corresponding price...
Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per ton. PRICE (Dollars per ton of bolts) 700 630 560 490 420 350 280 210 140 70 0 0 C ☐ L 1 U D 0 U 2 0 DO O 3 4 5 QUANTITY (Tons of bolts) ☐ Supply (Private Cost) O Demand (Private Value) 7 Social Cost (?) The market equilibrium quantity is 4.5 ▼ tons of bolts, but the socially optimal quantity of bolt production is 3 To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts. ▼tons. of $ per ton
A company is considering building a bridge across ariver. The bridge would cost $2 million to build andnothing to maintain. The following table shows thecompany’s anticipated demand over the lifetime ofthe bridge:Price per CrossingNumber of Crossings,in Thousands$8 07 1006 2005 3004 4003 5002 6001 7000 800a. If the company were to build the bridge, whatwould be its profit-maximizing price? Would thatlevel of output be efficient? Why or why not?b. If the company is interested in maximizing profit,should it build the bridge? What would be itsprofit or loss?c. If the government were to build the bridge, whatprice should it charge?d. Should the government build the bridge?Explain.
Figure & The vertical distance between peints A and B represents a tax in the market. Refer to Figure &. The munt of deadweight loss as a result of the tax is O $400 O $250 O $600 O $50. 82882288922 110 PRICE 100 Supply K Demand 610 15 20 25 10 QUANTITY 02
Quantity Private Value (Units) 1 2 3 4 S 6 (Dollars) Select one: O a. $2 O b. $10 55 20 18 O.C. O d. $3 16 14 12 Private Cost (Dollars) 12 15 18 21 24 27 External Benefit (Dollars) 10 10. 10 10 Refer to Table 10-3. What amount of subsidy per unit of output would move the market from the equilibrium level of output to the socially optimal level of output? 10 10

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26 ↑ Price 24 22 20 18 Supply 16 14 12 10 8 6 4 2 Demand Social Value 2 4 6 8 10 12 14 16 18 20 22 Quantity How large would the subsidy need to be to internalize the externality? O Less than $2 $2 O More than $2 O The size of the subsidy cannot be determined from the figure.