ECON HW #8

Marginal social cost is the marginal cost incurred by the entire society​ - by the producer and by everyone else on whom the cost falls. It is the sum of marginal​ _____ and marginal​ _____.

private​ cost; external cost

The graph shows the marginal social cost and the marginal private cost of producing liquid fertilizer. When the​ 2,000th ton of liquid fertilizer is produced in a​ week, the marginal external cost is​ ______ a ton.

$200

The graph shows the market for shrimp. Draw a shape that represents the consumer surplus from shrimp. Label it CS. Draw a shape that represents the producer surplus from shrimp. Label it PS. Consumer surplus from shrimp equals _________. Producer surplus from shrimp equals __________. The market for shrimp is efficient because​ ______. A. consumer surplus is greater than zero B. the market is producing the maximum possible quantity given the constraints on technology and capital C. at the market equilibrium marginal benefit equals marginal​ cost, and total surplus is maximized Your answer is correct. D. consumer surplus is greater than producer surplus

1.$240240. 2. ​$8080. 3. C.at the market equilibrium marginal benefit equals marginal​ cost, and total surplus is maximized

The graph shows the market for lawnmowers when lawnmowers are taxed. Calculate the amount of consumer​ surplus, producer​ surplus, deadweight​ loss, and tax revenue after the imposition of the tax. Consumer surplus is ______. Producer surplus is ______. The deadweight loss is ________. Tax revenue is ________.

1.$900 2.​$900 3.​$200 4.​$1,200

Click on the icon to study the EYE on CLIMATE CHANGE. Then answer the following questions. Government actions that could decrease carbon emissions include​ _______. A. enforcing the use of abatement technology B. implementing a​ cap-and-trade system C. increasing the tax on gasoline D. all of the above The government is not using these actions more aggressively because​ _______. A. the costs of decreasing carbon emissions are certain and would be born​ now, while the benefits would come many years in the future Your answer is not correct. B. if trends​ persist, by​ 2050, three quarters of carbon emissions will come from the developing countries C. some people​ don't accept the scientific evidence that emissions produce global warming D. all of the above

1.D. all of the above 2.D. all of the above

National parks to offer​ free-entry weekends Interior Secretary Ken Salazar has urged everyone to visit the national parks over the weekends of June​ 20-21, July​ 18-19, and August​ 15-16 when admission will be free. Kathy​ Kupper, spokeswoman for the National Parks​ Service, said that she​ couldn't remember the fee having been waived in more than 20 years. The number of visitors on a weekend when the fee is waived is​ _______. A. inefficient because producer surplus is zero B. efficient if at that number of​ people, marginal benefit equals marginal cost C. efficient because producer surplus is zero D. inefficient because when marginal benefit is zero people consider the national park to have zero value E. efficient regardless of the number of people who attend

B. efficient if at that number of​ people, marginal benefit equals marginal cost

Which of the following is an example of an abatement technology​? A. The use of catalytic converters in US cars has improved air quality. Your answer is correct. B. Today surveyors use many new data collection techniques. C. Process engineers​ design, construct, and operate chemical plants. D. The new quad core processor has made computers work faster than before.

A. The use of catalytic converters in US cars has improved air quality.

The graph shows the market for wool. The government passes a new law that requires producers to sell 50 pounds of wool a day. This market for wool is​ ______ because​ ______. A. ​inefficient; the marginal cost of the 50th pound of wool is greater than the marginal benefit from the 50th pound of wool B. ​efficient; the marginal cost of the 50th pound of wool equals the marginal benefit from the 50th pound of wool C. ​inefficient; more wool could be produced D. efficient; production is greater than zero E. inefficient; the marginal benefit from the 50th pound of wool is greater than the marginal cost of the 50th pound of wool Draw the deadweight loss when production is 50 pounds of wool a day. Label it

A. Inefficient; the marginal cost of the 50th pound of wool is greater than the marginal benefit from the 50th pound of wool

The figure represents the relationship between output and cost in an industry with an external cost. When output is at D​, what distance represents the marginal external​ cost?

BC

Which of the following is an example of a positive externality​?

Compulsory flu shots for all students prevents the spread of illness in the general public.

The graph shows the market for pillows in which the government has imposed a tax of​ $6 per pillow on sellers. Draw a point to show the price of a pillow with no tax. Label it 1. Draw a point to show the price paid by buyers following the tax. Label it 2. Draw a point to show the price received by sellers following the tax. Label it 3. The tax is​ _______. A. paid by the sellers because it is imposed on the sellers by the government B. split between the seller and the​ buyer, and the buyer pays more than the seller C. paid by the buyers because tax is always added to the sale price at the​ check-out D. split evenly between the seller and the buyer

D. split evenly between the seller and the buyer

In the​ figure, suppose that the government imposes a tax of​ $4 per pizza.​ Then, the A. buyers and sellers equally share the incidence of the tax. B. shaded area is the deadweight loss from the tax. Your answer is not correct. C. shaded area is the tax revenue from the tax. D. Both answers A and B are correct. E. Both answers A and C are correct.

D. Both answers A and B are correct

When production of a good results in an external​ cost, the unregulated competitive market equilibrium is inefficient because​ ________.

MSC​ > MB

Choose the correct statement.

Marginal social cost equals marginal cost plus marginal external cost.

The graph shows the market for plastic bags. Draw a point at the market equilibrium quantity and the market equilibrium price. Label it 1. Draw the deadweight loss. Label it DWL. Now suppose Seattle introduces a​ 20-cents charge on plastic shopping bags. Draw a point to show the quantity and price after the charge is introduced. Label it 2.

The charge increases the marginal cost of producing plastic bags. With a​ 20-cents charge on plastic bags that results in the efficient quantity of plastic​ bags, deadweight loss is zero .

The graph shows the unregulated market for electricity. The marginal external cost of the pollution created is equal to the marginal private cost of producing electricity at every quantity of electricity produced. Draw a point to show the marginal social cost when production is 500 kilowatts per day. Label it 1. Draw the marginal social cost curve. Label it MSC. Draw a point to show the quantity of electricity produced and the marginal social cost. Label it 2. Draw a shape to show the deadweight loss with no pollution control. Label it DWL.

The deadweight loss created by the pollution is ​$44.

Which of the following is an example of a negative externality​? A. A young couple wants to have a college fund that will pay​ $30,000 at the end of each​ half-year for 8 years. B. More people are buying automobiles before the arrival of the festive season. C. The new factory in the area has increased​ children's respiratory ailments. Your answer is correct. D. The central bank has raised its interest rates by 0.2 percent.

The new factory in the area has increased​ children's respiratory ailments.

Harry, the owner of a beauty​ salon, hires a new hair stylist. The wages paid to the new stylist are

a private cost and not an external cost .

For a​ firm, its labor costs are

a private cost.

Marginal private cost is the cost of producing​ _____ of a good or service that is borne by the​ _____ of that good or service. Marginal external cost is the cost of producing​ _____ of a good or service that falls on people other than the​ _____.

an additional​ unit; producer an additional​ unit; producer

A private cost is a cost of production that is

borne by the producer of a good.

The demand curve for pizza is downward sloping and the supply curve is upward sloping. If the government imposes a​ $2 tax on a​ pizza, ________ the tax.

both producers and consumers pay

An externality is a​ _____ that arises from production and that falls on someone other than the​ producer; or a​ _____ that arises from consumption and that falls on someone other than the consumer.

cost or​ benefit; cost or benefit

The excess burden of a tax is the​ _____ that results from it.

deadweight loss

Property rights are legally established titles to the​ ownership, use, and disposal of​ _____ and goods and services that are enforceable in the courts.

factors of production

The graph shows the market for tapes in which the government has imposed a tax of $66 per tape. Draw a point to show the price paid by buyers and the quantity bought. Draw shapes that represent the​ following: 1) consumer surplus. Label it CS. ​2) producer surplus. Label it PS. ​3) the tax revenue received by the government. Label it TR. ​4) the deadweight loss created by the tax. Label it DWL.

see hw for image.

The graph shows the market for books when books are not taxed. Now the government imposes a tax on the sellers of books of ​ $6 a book. The tax paid by the seller is​ _____ and the tax paid by the buyer is​ _____.

​$3; $3

Tax incidence is the division of the burden of a tax between the​ _____ and the​ _____.

​buyer; seller