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Chapter 12(0.35 points) List your own original example of a real-world negative
Chapter 12(0.35 points) List your own original example of a real-world negative externality. (Hint: if I was going to answer this question myself, I would say “Installing an inefficient irrigation system in a farm results in the depletion of a nearby aquifer.”
(0.4 points) Identify whether the market supply curve will shift right, shift left, or stay the same (choose “shift right,” ” shift left,” or ” stay the same” for each of A through D).A major automaker refuses to comply with government requirements to improve efficiency and is subsequently forced to pay a $90 million fine.
A gas pipeline operator is forced to pay $200 million in criminal fines after its pipeline leaks, harming local wildlife.
Illegal poaching activity causes a local species to go extinct, but investigators are never able identify the individuals/companies on which to impose fines.
County officials learn that an electronics company releases illegal levels of PCB toxins, but the officials look the other way and do not assess any penalty against the electronics company.
(0.25 points) A company violating federal water use regulations is creating a negative externality. Suddenly, the government forces the company to pay the full social cost associated with its production. What would most likely happen to the level of quantity produced by this company as a result of this new government requirement?
(1 point) Refer to the following table to answer A and B below.Demand and supply schedules for a firmPriceQuantity demandedQuantity supplied before considering pollution cost (private)Quantity supplied after considering pollution cost (social)
$201,1001,100500
$221,0001,200600
$249001,300700
$268001,400800
$287001,500900
When the firm only considers its private costs, not including the cost of pollution, what will be the equilibrium price and quantity in the market?
When the firm considers the full social costs, including the cost of pollution, what will be the equilibrium price and quantity in the market?
(0.5 points) Consider a large firm that emits 75 tons of excess waste into the sewers per year, resulting in negative consequences for individuals and society. Imagine the firm now faces a marginal pollution tax of $125,000 per each 15 tons of excess waste it emits. Refer to the following table, which presents the firm’s data (note: if it helps you to visualize the information provided, you can use the table to plot a chart similar to figure 12.3 in our textbook).Pollution, marginal cost, and marginal taxQuantity of excess waste emissions reduced (tons)Marginal cost of reducing emissionsMarginal pollution tax
15$111,000$125,000
30$121,000$125,000
45$131,000$125,000
60$141,000$125,000
75$151,000$125,000
In this scenario, how much will the firm “abate,” or reduce its emissions? (Hint: compare the marginal cost of reducing pollution to the marginal cost of the pollution itself; which is the higher cost?)
(0.75 points) A livestock farm currently emits 4 tons of toxic chemicals into a nearby river. The following table shows the total costs (TC) in dollars of cleaning up the toxic chemicals to different levels, together with the total benefits (TB) in dollars of doing so. Using the table, complete parts A and B below.Emissions, costs, and benefitsQuantity of chemical emissions (tons)
TCMC
TBMB
40N/A0N/A
34,00020,000
212,00038,000
122,00054,000
034,00068,000
Using the information in the table calculate the marginal costs (MC) and marginal benefits (MB) of reducing sewage emissions for this dairy farm.
Comparing the MC and MB, what is the optimal choice of toxic sewage emissions among the emissions quantities given in the table?
Chapter 13(0.25 points) List your own original example of a real-world positive externality.
(0.15 points) A company developing a technology to regenerate the ozone layer is creating a positive externality. Suddenly, the government introduces a subsidy, paying money directly such that the company now receives the full social benefit associated with its production. What would most likely happen to the level of quantity produced by the company as a result of this new government benefit?
(0.6 points) For each of the following goods in parts A to D, state whether it is excludable or nonexcludable.
The benefits derived from a firm reducing its emissions of greenhouse gases that degrade the atmosphere
A monthly membership to a gym/fitness center
A ticket to a concert by the band My Chemical Romance
The general sense of comfort and safety in the community provided by a functional state highway administration
(0.6 points) For each of the following goods, state whether it is rival or non-rival.A single courtside seat at a Golden State Warriors game
A small local playground with a capacity of 20 children, maximum
A local television station signal that is capable of reaching antennas from many local homes
The Grand Canyon’s Bright Angel Trail, which can accommodate all the people who want to use it at a given time
(0.4 points) Note: read carefully in section 13.3 of our textbook before responding. Suppose your household buys a brand new refrigerator. Is your household’s purchase of the refrigerator rival or non-rival? Is it excludable or nonexcludable? Briefly explain why.
(0.5 points) Suppose that by living in the United States, you inherently benefit from a sense of superiority you derive from the world-class performance of U.S. marathon runners in international competitions. Is your benefit rival or non-rival? Is it excludable or nonexcludable? Briefly explain why.
(0.5 points) A free box that can be used for shipping is a product offered by the United States Postal Service (USPS). Think about the free USPS shipping box in the context of rival/non-rival and excludable/nonexcludable. With that in mind, is the USPS shipping box classified as a “public good” or “private good” in the United States?
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