Homework Answers
11) option D is correct. Competitive equilibrium quantity is determined by the intersection of marginal cost curve private and demand function. This implies that it is determined by P(Q) and MCP.
12) option B is correct because Monopoly will use the marginal revenue and marginal cost function. It will not internalize the externality due to which its marginal cost is MCP
13) option B is correct.
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MCS 11. The figure to the right shows the market with a negative externality. The competitive...
8. In a market with a monopoly that faces direct demand Q(P) = a - bP,...
8. In a market with a monopoly that faces direct demand Q(P) = a - bP, and cost function c(Q) dQ - eQ? then the firm's marginal revenue function is a. b b C. MCS MR -MCP b. a- a-2bQ d. none of the above 9. The figure to the right shows the market with a negative externality. The competitive equilibrium quantity is a. A b. B c. C d. D 10. The figure to the right shows the market...
Questions 10, and 11 refer to this game: ont Sonia Move 1 Move 2 Yuhan Move...
Questions 10, and 11 refer to this game: ont Sonia Move 1 Move 2 Yuhan Move 1 Move 2 Move 3 1, 1 -1,2 3,4 2,3 1,0 -2,1 9. In this game, a. Yuhan has a dominant strategy b. Sonia has a dominant strategy C. There are multiple Nash Equilibria d. There is only one Nash Equilibrium 10. If this was a sequential game, with Yuhan moving first, which of the following is a Subgame Perfect Nash Equilibrium a. Yuhan:...
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in...
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. The environmental damages caused by throwing away the coffee pods is an example of a: a Positive externality (6. Negative externality c. Private cost d. Private benefit Consider the market for coffee in the graph to the right. 1. Left unregulated, what...
Suppose we have a market with a negative externality. Market demand is Q = 18 -...
Suppose we have a market with a negative externality. Market demand is Q = 18 - P The private cost is Cp(Q) = Q and the cost of the externality is CzQ) = Q?. a. What is the marginal cost of the externality, MCg? b. What is the marginal cost to society of production MCs? c. What is the Socially Optimal quantity and price? d. Suppose the government wanted to tax a monopoly in this market with a negative externality....
1) A good that generates a negative externality is sold in a competitive market. Demand is...
1) A good that generates a negative externality is sold in a competitive market. Demand is defined by P(Q)=600-2Q and supply is defined by P(Q)=Q. The externality from production is E(Q)=0.5Q2. a)What is the quantity produced in the competitive equilibrium? Q= b)What is the price in the competitive equilibrium? P= c)What is consumer surplus in the competitive equilibrium? CS= d)What is producer surplus in the competitive equilibrium? PS= e)What is the total value of the externality in the competitive equilibrium?...
QUESTION 9 In a perfectly competitive labor market with freely adjusting hours, what is the value...
QUESTION 9 In a perfectly competitive labor market with freely adjusting hours, what is the value of an hour? a. more than the hourly wage b. the hourly wage c. less than the hourly wage d. the value of additional health benefits received at work QUESTION 10 The value of an input in its next best use is the: a. opportunity cost. b.explicit cost. C. marginal benefit. d. cost-benefit ratio. QUESTION 11 A good for which the price is set...
65. A law stating that power plants are allowed zero emissions of sulfur dioxide is an example of ________. a. the Coase...
65. A law stating that power plants are allowed zero emissions of sulfur dioxide is an example of ________. a. the Coase Theorem b. a Pigovian corrective tax c. a Pigovian corrective subsidy d. command-and-control regulation 66. A corrective subsidy induces the ________ toward the socially optimal level. a. producers creating a negative externality to increase the quantity produced b. consumers benefiting from a positive externality to increase the quantity consumed c. producers generating a positive externality to reduce the...
23. Suppose the Environmental Protection Agency (LRT mental Protection Agency (EPA) wants to mandate that all...
23. Suppose the Environmental Protection Agency (LRT mental Protection Agency (EPA) wants to mandate that all methane emissions must be reduced to zero in order to alleviate global warming in the United States. Which of the following describes why most economists would disagree with this policy a. The environment is not worth protecting b. Reducing methane emissions is desirable, but whatever level of pollution firms decide to emit privately is already efficient c. The opportunity cost of zero pollution is...
8. Which of the following is an example of a market failure? a) some goods are...
8. Which of the following is an example of a market failure? a) some goods are public (non-excludable and non-rival). b) market activities have externalities. c) insurers cannot distinguish customers who are good risks and bad risks. d) all of the above The free-rider problem means a) people will not consume a public good unless it is free. b) it is efficient to provide a public good for free." c) people treat a public good as if it were free....
1. Which of the following is true of goods that give off negative externalities? ...
1. Which of the following is true of goods that give off negative externalities? a) a competitive industry typically produces too few of these goods b) the social cost is greater than the private cost at a given level of output c) to internalize the externality, the government should remove any tax on the sellers of the product d) both a) and b) are correct e) both b) and c) are...
8. In a market with a monopoly that faces direct demand Q(P) = a - bP, and cost function c(Q) dQ - eQ? then the firm's marginal revenue function is a. b b C. MCS MR -MCP b. a- a-2bQ d. none of the above 9. The figure to the right shows the market with a negative externality. The competitive equilibrium quantity is a. A b. B c. C d. D 10. The figure to the right shows the market...
Questions 10, and 11 refer to this game: ont Sonia Move 1 Move 2 Yuhan Move 1 Move 2 Move 3 1, 1 -1,2 3,4 2,3 1,0 -2,1 9. In this game, a. Yuhan has a dominant strategy b. Sonia has a dominant strategy C. There are multiple Nash Equilibria d. There is only one Nash Equilibrium 10. If this was a sequential game, with Yuhan moving first, which of the following is a Subgame Perfect Nash Equilibrium a. Yuhan:...
Unit 8 Market Failures: Externalities, public goods, natural resources The production of coffee pods results in environmental damages when consumers throw the pods away. Currently consumers are not responsible for the costs of disposing of these coffee pods. The environmental damages caused by throwing away the coffee pods is an example of a: a Positive externality (6. Negative externality c. Private cost d. Private benefit Consider the market for coffee in the graph to the right. 1. Left unregulated, what...
Suppose we have a market with a negative externality. Market demand is Q = 18 - P The private cost is Cp(Q) = Q and the cost of the externality is CzQ) = Q?. a. What is the marginal cost of the externality, MCg? b. What is the marginal cost to society of production MCs? c. What is the Socially Optimal quantity and price? d. Suppose the government wanted to tax a monopoly in this market with a negative externality....
QUESTION 9 In a perfectly competitive labor market with freely adjusting hours, what is the value of an hour? a. more than the hourly wage b. the hourly wage c. less than the hourly wage d. the value of additional health benefits received at work QUESTION 10 The value of an input in its next best use is the: a. opportunity cost. b.explicit cost. C. marginal benefit. d. cost-benefit ratio. QUESTION 11 A good for which the price is set...
23. Suppose the Environmental Protection Agency (LRT mental Protection Agency (EPA) wants to mandate that all methane emissions must be reduced to zero in order to alleviate global warming in the United States. Which of the following describes why most economists would disagree with this policy a. The environment is not worth protecting b. Reducing methane emissions is desirable, but whatever level of pollution firms decide to emit privately is already efficient c. The opportunity cost of zero pollution is...
8. Which of the following is an example of a market failure? a) some goods are public (non-excludable and non-rival). b) market activities have externalities. c) insurers cannot distinguish customers who are good risks and bad risks. d) all of the above The free-rider problem means a) people will not consume a public good unless it is free. b) it is efficient to provide a public good for free." c) people treat a public good as if it were free....
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