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- 16.)The demand curve for electrical output of a coal generating power plant is Pº 17000 – QD. 1 The supply curve for the plant's electrical output is given by PS 8000 +QS. Sulfur dioxide 2 emissions from the coal plant impose an external cost equal to $3000 per gigawatt-hour of electricity generated on local residents. What is the marginal benefit of society (MBS) curve for this market? e.) MBS = 17000 – Q f.) MBS = 20000 1 g.) MBS = 8000 +Q 2 1 h.) MBS = 11000 + ÷Q 2 17.)The demand curve for electrical output of a coal generating power plant is PD 17000 – QD. = 1 The supply curve for the plant's electrical output is given by PS = 8000 +Q$. Sulfur dioxide emissions from the coal plant impose an external cost equal to $3000 per gigawatt-hour of electricity generated on local residents. What is the marginal cost of society (MCS) curve for this market? e.) MCS = 17000 – Q f.) MCS = 20000 – Q g.) MCS = 1 8000 +Q 2 1 h.) MCS = 11000 +. 2 18.)Which of the following is TRUE in a market that…Q4. (a) If you are a firm owner who is operating in the perfect competitive market, you areproducing socially efficient outcome. Does it imply that your profits are zero? If you become amonopolist then why do you deviate from the socially efficient outcome? b) In Delhi, as the winter season is approaching, how will it affect the demand function and themarket equilibrium of sweater market? Now after that if the price of wool increases how will themarket equilibrium be affected?4c i) Discuss the limitations of the Coasian approach to externalities 4cii) Discuss the strengths of the Coasian approach to externalities
- 22.) Consider a market subject to a negative externality cause by pollution. Suppose that, initially, the government is dealing with this negative externality using a Pigouvian tax. The government is considering switching its handling of the negative externality to a scheme where it auctions off pollution licenses to producer instead. If the government makes this policy change, then producer surplus will and government surplus will a.) Increase, increase b.) Decrease, decrease c.) Decrease, increase d.) None of the above 23.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their town park are given by PıD =100–QP_PMD =200–2Q", and Pc³ =300–3Qº respectively. What is the slope of the MBS curve for statues? а.) -4 b.) -5 с.) -6 d.) -7 24.) Suppose that, in the above example, statues are sold in a competitive market with a supply curve given by PS =516+QS. What quantity of statues should the local government install in the park to maximize total surplus?…(Negative Externalities) Suppose you wish to reduce a negative externality by imposing a tax on the activity that creates that externality. When the amount of the externality produced per unit of output increases as output increases, the correct tax can be determined by using a demand-supply diagram; show this. Assume that the marginal private cost curve slopes upward. Negative Externalities: The Market for Electricity in the Midwest:1-) Can an activity generate both positive and negative externalities at the same time? Give anexample from your life and explain your answer.
- 1) People who live on the edge of small lakes sometimes have break walls constructed on their property by the shore. A break wall is typically a vertical column of wood or concrete that prevents high water levels from covering part of the owner's property, reducing the size of the beach, and/or eroding the yard. However, several communities have restricted property owners from building break walls. What is one reason for that? Hint: Think about potential externalities of building a break wall. (Short answer) 2)When are quantity restrictions not the same as price restrictions (via taxes)? Describe one situation in which the government would be better off imposing quantity restrictions than setting a tax and explain why quantity restrictions are better in that case. (Short answer)10. Likewise, in the case of positive externalities there is no incentive for the private consumer to pay for any more than the benefits that they receive as individuals. However, there may also be benefits that exist for society as a whole. • Positive externalities result in an (underallcation. overallocation) of resources to the production of a product. All of the benefits associated with the product are not reflected in the (demand, supply) curve. The (demand, supply) curve lies to the (right, left) of the full-benefits demand curve. • Thus, due to the positive externalities, benefits are (underestimated, overestimated); resources are (underallocated, overallocated) where positive externalities exist. • Examples of positive externalities of production are In the case of public goods (and services), it is impossible to divide the product into individual saleable units for consumers to purchase and, additionally, the exclusion principle doesn't apply. That is, even if the product…3. Externalities. Consider a firm that causes pollution in a lake affecting a group of individuals. The production cost of the firm is c(q) = cq²/2, where c> 0 and q is the quantity produced by the firm, and the total cost imposed on the individuals (adding the costs suffered by each of them) is (q) = pq²/2, where > 0. (a) Suppose initially that the firm cannot bargain, trade, or otherwise compensate the individuals. Calculate the profit maximizing choice of output by the firm, the revenue of the firm, the private cost of the firm, the externality that the firm imposes over the individuals, and the total social cost. (b) Suppose now that the individuals affected by pollution in the lake own the lake, and that they organize to sell pollution permits, with a price of p, so that the firm must pay p per unit of output. Find the competitive price of pollution permits, as well as the profit max- imizing choice of output by the firm if the firm must buy pollution permits and buys them at the…
- Answer the question 1. Identify an external benefit that could be generated by the presence of a shopping mall for a local residents.12. Bernard and Elton are neighbors. Bernard never mows his lawn, rakes his leaves, or trims his hedges. His overgrown yard is not only an eyesore, but it is pulling down the value of Elton's house. a) How could the Coase theorem be used to remedy this negative externality? b) Does it matter whether Bernard has the right to ignore his yard or Elton has the right to force him to clean it up?8) The government wants to promote activities that result in positive externalities on society. What could the government do to increase the amount of these activities? Explain.
