Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. Homework (Ch 10)PRICE (Dollars per ton of bolts)500450400350300250200150100+5000B1D2D53QUANTITY (Tons of bolts)The market equilibrium quantity is1 Supply(Private Cost)6Demand(Private Value)Social Costtons of bolts, but the socially optimal quantity of boit production isTo create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose aof bolts.tons.or Sper ton 3. The effect of negative externalities on the optimal quantity of consumptionConsider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those livingdownstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $150 per ton. The following graph shows thedemand (private value) curve and the supply (private cost) curve for bolts.Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $150 per ton.

The allocative efficient quantity of output also known as the socially optimal quantity, is a point…

PRICE (Dollars per ton of bolts) 500 450 400 350+ 300 250 200 150 100 50 0 0 B 1 2 4 5 3 QUANTITY (Tons of bolts) The market equilibrium quantity is 1 Supply (Private Cost) 6 Demand (Private Value) Social Cost tons of bolts, but the socially optimal quantity of boit production is tons. A

PRICE (Dollars per ton of bolts) 500 450 400 350+ 300 250 200 150 100 50 0 0 B 1 2 4 5 3 QUANTITY (Tons of bolts) The market equilibrium quantity is 1 Supply (Private Cost) 6 Demand (Private Value) Social Cost tons of bolts, but the socially optimal quantity of boit production is tons. A

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 2.3P: (Negative Externalities) Suppose you wish to reduce a negative externality by imposing a tax on the...

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Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

Homework (Ch 10)
PRICE (Dollars per ton of bolts)
500
450
400
350
300
250
200
150
100+
50
0
0
B
1
D
2
D
5
3
QUANTITY (Tons of bolts)
The market equilibrium quantity is
1 Supply
(Private Cost)
6
Demand
(Private Value)
Social Cost
tons of bolts, but the socially optimal quantity of boit production is
To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a
of bolts.
tons.
or S
per ton

3. The effect of negative externalities on the optimal quantity of consumption
Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living
downstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $150 per ton. The following graph shows the
demand (private value) curve and the supply (private cost) curve for bolts.
Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $150 per ton.

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Step 1: Define Socially optimal quantity

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