2018-09-26 17:11:56 Demand Quantity Figure 5 1 shows a market with an externalit

Question

2018-09-26 17:11:56 Demand Quantity Figure 5 1 shows a market with an externality The current market equilibrium output of Q1 is not the economucally etficien output. The economically efficient output is 92. 12) Refer to Figure 2 Suppose the current market equilibrium output of Q1 is not the economically 12) ficient output because of an externality The economically etficient output is Q2 In that case the diagram shows e effect of a negative externality in the production of a good B) the effect of an external cast imposed on a producer Q the efect of an external benefit such as a subsidy granted to consumers of a Dj the effect ot a positive externmality in the production of a good A) th 13) An isoquant shows 13) A) the combinations of two inputs that cost the same total quantity of money 8) the combination of two goods that cost the same amount of money O the combinations of two inputs that yield the same total product. D) the combinations ot two goods that yield the same total satisfaction 14) Willingness to pay mrasi

Explanation / Answer

12. B) the effect of an external cost imposed on a producer.

The suppy increases and Q1 is not economically efficient beacuse there is an external cost imposed on producers. So, to cope up with the externality the producer starts producing more so, the supply increases. But producers dont pay anything from their pocket so, they impose them on the consumers which leads to increase in price for them. So, ultimatley the consumers have to bear evreything.

13- C) the combination of two inputs that yield the same total product.
The isoquant basically means that iso- equal and quant- quantity. That means equal quantity of the products.

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