20 In the process of producing electricity many electrical generating firms burn coal. Burning this fuel creates air pollution that causes livestock and people to have health problems. If this air pollution is not accounted for by these firms operating in a competitive industry then we would say that this industry is producing a a nd the unregulated market quantity is _than the socially efficient quantity. A. positive externality: higher than B. negative externality: lower than C. positive externality, lower than D. negative externality; higher than E. negative externality; equal to
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The corresponding table shows the demand schedule and two supply schedules for a tire producer
Price($) | Quantity Demanded (daily demand) | Quantity Supplied(if firms only consider private costs((Daily Supply) | Quantity Supplied (if firms consider both private costs and environmental pollution costs) (daily supply) |
60 | 110 | 70 | 50 |
80 | 100 | 80 | 60 |
100 | 90 | 90 | 70 |
120 | 80 | 100 | 80 |
140 | 70 | 110 | 90 |
160 | 60 | 120 | 100 |
a. Is there an externality associated with tires?
1.Yes, a positive externality.
2.Yes, a negative externality.
3. No.
b. At a price of $100/tire, 90 tires are demanded daily. At this price, how will society be affected environmentally if the producer is not required to account for environmental pollution costs and produces 90 tires?
1. Society is better off
2. Society is worse off
3. Society experiences no change
c. The socially efficient number of tires is .......than the number of tires that results from the market provision of the good.
1. higher
2. lower
3. the same as