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 $100/tire, 90 tires are demanded daily. At this price, how will society be affected environmentally if the producer is not required to account for environmental pollution costs and produces 90 tires?
1. Society is better off
2. Society is worse off
3. Society experiences no change
c. The socially efficient number of tires is .......than the number of tires that results from the market provision of the good.
1. higher
2. lower
3. the same as
The corresponding table shows the demand schedule and two supply schedules for a tire producer
| Price($) | 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 $100/tire, 90 tires are demanded daily. At this price, how will society be affected environmentally if the producer is not required to account for environmental pollution costs and produces 90 tires?
1. Society is better off
2. Society is worse off
3. Society experiences no change
c. The socially efficient number of tires is .......than the number of tires that results from the market provision of the good.
1. higher
2. lower
3. the same as
Related textbook solutions
Related questions
Consider the market for rental housing in Your town. The demand and supply schedules for rental housing are given in the table.
|
Price ($ per month) |
Quantity Demanded (thousands of units) |
Quantity Supplied (thousands of units) |
|
1100 |
40 |
80 |
|
1000 |
50 |
77 |
|
900 |
60 |
73 |
|
800 |
70 |
70 |
|
700 |
80 |
67 |
|
600 |
90 |
65 |
|
500 |
100 |
60 |
- In a Free market for rental housing, what is the equilibrium price and quantity?
- Now suppose the government in Your town decides to impose a ceiling on the monthly rental price. What is the highest level at which such a ceiling could be set in order to have any effect on the marker? Explain your answer.
- Suppose the maximum rental price is set equal to $500 per month. Describe the effect on quantity demanded, supplied, and exchanged in the rental-housing market.
- Suppose a black market develops in the presence of the rent controls in part (c). What is the black market price that would exist if all of the quantity supplied were sold on the black market?
