of the town where it operates: the marginal exter- nal cost associated with the
ID: 1139966 • Letter: O
Question
of the town where it operates: the marginal exter- nal cost associated with the Qth unit of produc- tion is given by 6Q. What is the marginal private cost associated with the 10th unit produced? What is the total marginal cost to society associ- ated with producing the 10th unit (the marginal social cost of the 10th unit)? 8. In two-car automobile accidents, passengers in the larger vehicle are significantly more likely to survive than are passengers in the smaller vehi- cle. In fact, death probabilities are decreasing in the size of the vehicle you are driving, and death probabilities are increasing in the size of the vehi- cle you collide with. Some politicians and lob- byists have argued that this provides a rationale for encouraging the sale of larger vehicles and discouraging legislation that would induce auto- mobile manufacturers to make smaller cars. Criti- cally examine this argument using the concept of externalities. 9. Why do governments sometimes impose quantity regulations that limit the level of negative- externality-inducing consumption? Why do gov- ernm taxing this consumption? ents sometimes impose price regulations byExplanation / Answer
8)
Car accidents are example negative externalities in automobile market. Car produces many types of externalities such as traffic accident, congestion, pollution etc.
Traffic accidents are most critical externalities. Smaller cars tend to produce larger negative externalities than bigger cars.
Producers do not take into account such negative externalities in its production decisions. In order to produce efficient level of cars, such cost must be internalised. While bigger cars do not produce much negative externalities. When negative externalities are internalised,
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.