mpact of Externality from a Producer 6.3 400390 660 700 800 900 14. Refer to Fig
ID: 1104389 • Letter: M
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mpact of Externality from a Producer 6.3 400390 660 700 800 900 14. Refer to Figure a3. What is the socially-optimal quantity of output in this market? a. 200 units. b. Between 200 and 450 units. e. 500 units d. Between 500 and 650 units 15. Refer to Figure K3. If the government wanted internalize the externality to achieve the socially-optimal level of output, how larg would the per unit tax need to be? a. $2. b. Less than $2. . More than $2. d.The size of the subsidy cannot be determined from the figure 16. Refer to Figure 83. If the govenment wanted internalize the extemality to achieve the socialy-optimal level of eutput, how much is the tax revenue? a. $500. b. $1000. c.$$1500. d. The size of the tax revense cannot be determined from the figure 17. A private good is both rivalry in consumption and excludable, which of the following would NOT be considered a private good? a. pizza b I-phone 8. c. french fries. d. a hiking trail. 18. Goods that are neither excludable nor rival in consumption would be considerod public goods. Which of the following would be considered a pablic good? a national park b. TV or internet cable hiking trail. c. a bicycle d. a boat. are both non-excludable and rival in consumption would be considered common resources. Which of the following 19, Goods that goods is a common resource? a national defense. b. cable TV service. d. long leg crabs in the ocean. c. a private resource 20. Fire protection is a good example of a natural monopoly or club good because a protecting one house is unlikely to reduce the protection available to others c. it is non-excludable. d. All of the above are correct. b. it is rival in consumption.c, non-e 21. A free rider is a person who receives the benefit of a good but avoids paying for it. A free-rider problem exists for any good that is not excludable. When goods are not excludable a. the goods will not be produced since no one values them. b the free-rider problem prevents the private market from supplying them c, the free-rider problem encourages the private market to supply them abundantly d. the private market will produce the goods but will charge less for them than if they are produced as public goods RMUNNICHAExplanation / Answer
Q14-16 are answered below
14.
Correct option: 500 units
Reason: It is the point of intersection of social cost and demand curve
15.
Correct option: $2
Reason: Externality cost = tax cost = social cost - private cost = $5-$3 = $2
16.
Correct option: $1000
Reason: Tax revenue = tQ = 2(500) = $1000
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