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Fire extinguishers exhibit positive externalities because, even though people buy them for their own use, they may prevent fire from damaging the property of others. The following graph shows the market for fire extinguishers. Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflect this difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect this difference. Price of Fire Extinguishers Supply Demand Quantity of Fire Extinguishers Demand Supply Market QOptimum

Fire extinguishers exhibit positive externalities because, even though people buy them for their own use, they may prevent fire from damaging the property of others. The following graph shows the market for fire extinguishers. Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflect this difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect this difference. Price of Fire Extinguishers Supply Demand Quantity of Fire Extinguishers Demand Supply Market QOptimum

Micro Economics For Today
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter14: Environmental Economics
Section: Chapter Questions
Problem 3SQP
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Fire extinguishers exhibit positive externalities because, even though people buy them for their own use, they may prevent fire from damaging the property of others. The following graph shows the market for fire extinguishers. Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflect this difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect this difference. Price of Fire Extinguishers Supply Demand Quantity of Fire Extinguishers Demand Supply QMarket ? 10
Transcribed Image Text:Fire extinguishers exhibit positive externalities because, even though people buy them for their own use, they may prevent fire from damaging the property of others. The following graph shows the market for fire extinguishers. Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflect this difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect this difference. Price of Fire Extinguishers Supply Demand Quantity of Fire Extinguishers Demand Supply QMarket ? 10
Price of Fire Extinguishers Supply Demand Quantity of Fire Extinguishers 1 O True O False Suppose the external benefit is $10 per extinguisher. Demand Supply QMarket Use the black point (plus symbol) to indicate the market equilibrium level of output. Then use the grey point to indicate the efficient level of output in this case. QOptimum True or False: Subsidizing people $10 for every fire extinguisher they buy would yield the efficient outcome.
Transcribed Image Text:Price of Fire Extinguishers Supply Demand Quantity of Fire Extinguishers 1 O True O False Suppose the external benefit is $10 per extinguisher. Demand Supply QMarket Use the black point (plus symbol) to indicate the market equilibrium level of output. Then use the grey point to indicate the efficient level of output in this case. QOptimum True or False: Subsidizing people $10 for every fire extinguisher they buy would yield the efficient outcome.
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