Suppose that a paper mill is located on a river. Making paper also produces waste, which...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose that a paper mill is located on a river. Making paper also produces waste, which runs off Into the river and pollutes the downstream area. The people who live in the downstream area are not consumers of the paper that the plant produces. The production of paper Involves an external cost of $2 per ream of paper produced. If nelther the firm nor consumers Include the external cost in their consumption or production decisions, the resulting equilibrlum will involve overproduction of paper, relative to the quantity that would maximize social surplus. One way to correct the negative externality would be to Impose a tax on consumers. .which will cause market price to Click to select) and quantity to If the tax Is Imposed on consumers. (Click to select) [Click to select) Click to select) Alternatively, the government could impose a tax on producers. If the tax Is imposed on producers, ]. which will cause market price to (Click to select) and quantity to Click to select) Assuming that the tax is Identical in either case and is equal to the external cost, which of the following statements is nottrue? O The externality will be Internalized in either case. O The new market quality will be socially optimal in elther case. O The effect on market price will be the same in elther case. O Both producers and consumers will be worse off in either case. O The effect on market quantity will be the same in either case. Suppose that a paper mill is located on a river. Making paper also produces waste, which runs off Into the river and pollutes the downstream area. The people who live in the downstream area are not consumers of the paper that the plant produces. The production of paper Involves an external cost of $2 per ream of paper produced. If nelther the firm nor consumers Include the external cost in their consumption or production decisions, the resulting equilibrlum will involve overproduction of paper, relative to the quantity that would maximize social surplus. One way to correct the negative externality would be to Impose a tax on consumers. .which will cause market price to Click to select) and quantity to If the tax Is Imposed on consumers. (Click to select) [Click to select) Click to select) Alternatively, the government could impose a tax on producers. If the tax Is imposed on producers, ]. which will cause market price to (Click to select) and quantity to Click to select) Assuming that the tax is Identical in either case and is equal to the external cost, which of the following statements is nottrue? O The externality will be Internalized in either case. O The new market quality will be socially optimal in elther case. O The effect on market price will be the same in elther case. O Both producers and consumers will be worse off in either case. O The effect on market quantity will be the same in either case.
Expert Answer:
Answer rating: 100% (QA)
demand curve will shift to the left decrease decrease supply curve will shift ... View the full answer
Related Book For
Posted Date:
Students also viewed these economics questions
-
Suppose that a paper mill feeds a downstream box mill. For the downstream mill, the marginal profitability of producing boxes declines with volume. For example, the first unit of boxes increases...
-
Suppose that a paper mill earns $400,000 when it pollutes a river, and that it can abate pollution at a cost of $80,000. The effects of pollution are confined to a single farmer, who earns $530,000...
-
People who live in rural areas often have less access to capital and, as a result, their productivity is lower on average than the productivity of people who live in cities. An article in the New...
-
Use the data in Exercise 13.28.To familiarize yourself with recursive least squares, estimate the savings functions for 19701981, 19701985, 19701990, and 19701995. Comment on the stability of...
-
Use Table 13 - 1 Appropriate formula for Exercise 11 - 16. See Examples 3 and 4 for table or Examples 5 through 7 for formulas. Find the future value of $50,000 at 6% compounded semiannually for ten...
-
What is an exchange rate? What is the difference between direct and indirect rates? What is a cross rate?
-
Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: deluxe and basic. Required 1. Compute a single plantwide...
-
The following information pertains to Crane Video Company. 1. Cash balance per bank, July 31, $7,263. 2. July bank service charge not recorded by the depositor $28. 3. Cash balance per books, July...
-
Please share a quote from Dr. Thom Garfat's piece where he signals, implicitly or explicitly, how this relational model frames youths. Identify something the relational CYC/"inter-personal...
-
During the second half of December 20-1, TJ's Specialty Shop engaged in the following transactions: Dec. 16 Received payment from Lucy Greene on account, $1,960. 16 Sold merchandise on account to Kim...
-
For this assignment students will develop a formal email, addressed to the instructor of your course. Your email will be an introduction email. The email should include the following information: A...
-
Integrating artificial intelligence (AI) into production is likely to have a profound impact on labour markets. It will likely lead to enormous gains in productivity (analogous to or even greater...
-
write one-page presentation or infographic based on the real-world example. It can be related to the economy in general or related to a specific industry or interest. The one page could simply be a...
-
What ethical dilemmas arise in the context of change management, particularly concerning issues of transparency, fairness, and accountability, and how can these be addressed to uphold ethical...
-
Why is it important for mental health workers to be able to analyze legal challenges facing families today? how are families affected by laws specific to mental health issues or specific to family...
-
Data analytics and predictive modeling have revolutionized the field of managerial auditing, providing auditors with powerful tools to extract insights, detect patterns, and make informed decisions....
-
In your new role volunteering at the check-in desk at the local hospital, you receive a box of office supplies from the courier. You sign for it and receive an invoice. You supply the bookkeeper with...
-
How has the globalization of firms affected the diversity of their employees? Why has increased diversity put an additional burden on accounting systems?
-
Repeat Problem 8, but assume that Humphrey and Lauren have the preferences described in Problem 9.
-
Suppose Noah and Naomi's short-run weekly production function for garden benches is where L represents the number of hours of labor employed. The wage rate is $15 an hour. What is their cost...
-
After Henry Ford invented the assembly line for manufacturing automobiles, other automobile firms copied his invention. The new technology increased the economies of scale in automobile...
-
Using two CST elements, solve the simple shear problem depicted in the figure and determine whether the CST elements can represent the simple shear condition accurately or not. Material properties...
-
A heat conduction problem is modeled using four onedimensional heat conduction elements, as shown in figure 4.6. All elements are of the same length, \(L=1 \mathrm{~m}\), cross sectional area of...
-
Consider heat conduction in a uniaxial rod surrounded by a fluid. The left end of the rod is at \(T_{0}\). The free stream temperature is \(T^{\infty}\). There is convective heat transfer across the...
Study smarter with the SolutionInn App