The following graph shows the demand (marginal private benefits) and supply (marginal private costs) curves for a good. The dashed drop lines on thegraph reflect the market equilibrium price and quantity for this good.Suppose that a negative externality arises as a result of the production of this good.Adjust the following graph by shifting one of the curves to reflect the presence of the negative externality.PRICE AND COSTgreaterlessThe market output is greaterQUANTITYSupplyDemandthan the socially optimal output.DemandSupply(?

Negative externalities occur when a transaction has a cost that neither the buyer nor the seller is…

Answered: PRICE AND COST I I I I I greater less…

PRICE AND COST I I I I I greater less The market output is greater QUANTITY Demand than the socially optimal output. Demand Supply

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 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...

See similar textbooks

Related questions

Q: list 8 9 10 11 12 K The figure to the right shows the economy initially in equilibrium at output Yo…

A: Aggregate expenditure describes the total amount of spending in the economy through consumption,…

Q: 2. Mark and Jonathan are going to look for an apartment together. Mark has a reservation price of…

A: a. The combined reservation prices of Mark and Jonathan for a 2-bedroom apartment are $850 + $750 =…

Q: The following graph plots the aggregate demand curve for this economy. Show the impact of the…

A: The money demand curve is downward sloping. It represents the inverse relationship between interest…

Q: Sandra and Trey operate a small company that produces souvenir footballs. Their fixed cost is $2,000…

A: A company produces football. Their fixed cost is $2000 per month. Each worker cost $1000 per month.

Q: gure 8.3 shows a firm's marginal cost, average total cost, and average variable cost curves. At…

A: The total cost is the sum of the total of fixed cost and variable cost.TC = TFC+TVCFixed costs do…

Q: In Solow model, we assumed that population growth rate is irrelevant to saving rate and…

A: In the slow growth model, technological progress and population growth play critical roles in…

Q: If the production function is F(K,L)=A∗K0.4L0.6 then the marginal rate of technical subsitution is

A: The objective of the question is to calculate the Marginal Rate of Technical Substitution (MRTS)…

Q: Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Unemployment Rate Inflation rate % % 8.24…

A: Unemployment is the economic state in which individuals who are actively seeking employment are…

Q: Refer to the table to the right which shows cost data for Lotus Lanterns, a producer of whimsical…

A: Variable costThe total expenses for a firm are composed of two branches. The fixed expenses are the…

Q: Suppose the economy is in a long-run equilibrium, as shown in the following graph. Now suppose that…

A: Aggregate demand curve shows the inverse relationship between price level and real GDP. AD curve is…

Q: The recent report on SMEs across the country asserted that the contribution of SMEs to GDP and…

A: The Impact of Strategic Orientation on the Performance of Small and Medium-Sized Enterprises (SMEs)…

Q: An unregulated natural monopoly bottles Elxir, a unique product with no substitutes. The monopoly's…

A: A monopoly company is a business that holds exclusive authority over manufacturing and distributing…

Q: The distribution of income OA) is more even in developing countries than in the Russia B) is more…

A: This can be defined as a concept that shows the continuous progress in any nation it does not happen…

Q: 21. Return on assets equals net profit margin times asset turnover.

A: Since you have provided multiple independent questions, according to our guidelines, only the first…

Q: Refer to the figure above. As a result of the shift in aggregate demand from ADO to AD1, equilibrium…

A: A model used in macroeconomics is the (AD/AS) model. It clarifies how an economy's price level and…

Q: You have £2,000 and you can only choose one of the following two investments. First, you may deposit…

A: To compare the two investment options, we have to calculate the expected returns for each.Option 1:…

Q: 1. For each of the goods listed below, discuss whether the good is likely to entail an external cost…

A: In economics, an externality, also known as an external cost or external benefit, is an indirect…

Q: Consider the figure to the right, where a consumer initially maximizes utility at…

A: Given the tastes and preferences, a rational consumer seeks to maximize the utility or satisfaction…

Q: Figure 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price…

A: The perfectly competitive market refers to market where large number of buyers and sellers exist in…

Q: Refer to the table below. Note that the first column shows variable costs. Quantity Cost 0 1 2 3 5 6…

A: The firm will produce where the marginal revenue is equal to marginal cost to maximize its profit.…

Q: Price in dollars Global price before tariff No trade price Domestic price after - tariff 18 13 10 8…

A: Tariff refers to a type of tax that the country importing goods imposes on the goods. Thus when the…

Q: Alternative Annualized first cost, $/year 60,000 90,000 45,000 35,000 110.000 150.000 20,000 45,000…

A: The benefit-cost ratio is a monetary or qualitative statistic that shows how the relative expenses…

Q: Consider the following economy which produces two goods, wine and cheese in the two periods of time.…

A: The price and quantity produced of cheese and wine is given asPrice of cheese ($)Quantity of Cheese…

Q: Assume that the gross domestic product is $6,000, personal disposal income is $5,100, the government…

A: Grpss Domestic Product refers to the sum of all the production of goods and services that takes…

Q: Wage/Year W₁ W₂ W₂ W₂₁ MFC 4 MR MRP Labor/Year 82) Refer to the above figure. Under monopsony, the…

A: In contrast to the situation of monopoly, often the market experiences only a single buyer. Now,…

Q: Today, you have $40,000 to invest. Two investment alternatives are available to you. One would…

A: "Future worth" typically refers to the future value of a sum of money or an investment after a…

Q: 3. Inflation and the nominal interest rate When the actual and expected (or anticipated) inflation…

A: The loanable funds market represents a conceptual marketplace where individuals who save and those…

Q: (Scenario: Monopoly in Stand-Up Paddle Rentals) Use Scenario: Monopoly in Stand Up Paddle Rentals.…

A: Demand function: Marginal cost function: ATC at the profit-maximizing output is $12.50We need to…

Q: Reginald looked for work for six months but could not find a job to his liking. He now spends his…

A: A person is considered to be unemployed if he is of legal age and is willing and able to work but…

Q: The Registered Insurance Brokers Act of Ontario states, "An insurance broker means any person who…

A: Insurance is a contract, represented by a policy, in which an insurer indemnifies another against…

Q: PRICE LEVEL 140 135 130 125 115 110 105 100 100 105 LRAS AS 110 115 120 OUTPUT (Bons of dollars) AD…

A: The aggregate demand curve is the graphical presentation of the macroeconomic concept of demand that…

Q: Price 65 60 55 50 45 40 35 30 25 20 15 10 5 CUT 0 0 50 100 Type your answers in all of the blanks…

A: The demand curve is represented by curve D1 and the supply curve before tax is represented by curve…

Q: Identify a newspaper article that illustrates a market failure in Trinidad and Tobago. Market…

A: Article:Trinidad and Tobago's Water Pollution Crisis: A Market FailureTrinidad and Tobago, a…

Q: Calculate the missing information in the table 1.1 taking into consideration that the base year is…

A: The GDP deflator is a measure used to gauge the overall level of prices in an economy relative to a…

Q: Joe has $62 to spend on apples and oranges. Given the information in the following table, is Joe…

A: Joe's budget for apples and oranges is $62.The marginal utility on the last unit of the apple is 30…

Q: 3. A village has six residents, each of whom has accumulated savings of $100. Each villager can use…

A: A government bond is an instrument of credit for the government, the public purchases the government…

Q: Asap Total cost can be divided into two types. What are those two types? Select one: a. fixed…

A: Costs refers to the all type of expenses that incur in the process of production of goods and…

Q: Consider two hypothetical countries. In Country A, 18 percent of the labour force is unemployed for…

A: Those who are ready to work and able, but unable to find employment opportunities are referred to be…

Q: How changes in government expenditure and tax programs through the setting of the government's…

A: Gross domestic product is the final combination of goods and services in a country. GDP is an…

Q: In the figure above the firm is suffering negative economic profit. O the firm is operating in a…

A: The monopoly market refers to a market where only one firm exists in the market. A Firm is price…

Q: The initial condition of the banking system is as follows: $500 billion in reserve, $4,500 billion…

A: Banking institutions allow fiscal transactions by offering services such as deposits and loans,…

Q: Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price…

A: Marginal revenue is a central concept in microeconomics that describes the additional total revenue…

Q: c. Given your observations in 1)c., consider an economy that converges towards .. When and why would…

A: a) Derive the desired number of children under the assumption that education is provided by public…

Q: Suppose the tattoo shop market in Richmond is monopolistically competitive. Consider the market from…

A: Monopolistic competition is a form of imperfect competition. There are large number of firms. There…

Q: Graphically illustrate and explain the exchange rate regime over a 15-year period for two small open…

A: The value of domestic depends on the financial institutions and their vision regarding the exchange…

Q: Company XYZ is a farming company. The company are famous for producing strawberries and blueberries.…

A: The break-even point in economics is a point in which the total cost equals the total revenue. This…

Q: Draw a graph of "catch-up" that shows where you would expect to see a country with low saving rates…

A: Catch up effect also known as convergence, is the hypothesis in economics that suggests that…

Q: a) What is the firm's marginal cost when it is producing y units of output? b) Imagine that the…

A: Production function is one type of function in which all kinds of combinations of inputs are…

Q: Figure: The Home and World Markets The supplied graph shows the case for a tariff imposed by a large…

A: Terms of trade are defined as the index of export prices divided by the index of import prices.…

Q: Partnership Game Lee (Player 1), and Julie (Player 2), are business partners. Each of them has to…

A: The level of effort is given as The cost of putting the effort is given as The profit for both the…

Question

The following graph shows the demand (marginal private benefits) and supply (marginal private costs) curves for a good. The dashed drop lines on the
graph reflect the market equilibrium price and quantity for this good.
Suppose that a negative externality arises as a result of the production of this good.
Adjust the following graph by shifting one of the curves to reflect the presence of the negative externality.
PRICE AND COST
greater
less
The market output is greater
QUANTITY
Supply
Demand
than the socially optimal output.
Demand
Supply
(?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define negative externality:

VIEW

Step 2: Determine the correct answer:

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
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?
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
Give an example of a positive externality and an example of a negative externality.
Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. QS1 is the quantity supplied without social costs. QS2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?
Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost?