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a. The private marginal benefit of commodity X is given by MB = 10 - X, the external marginal benefit is constant at $2. If

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a. The private marginal benefit of commodity X is given by MB = 10 - X, the external marginal benefit is constant at $2. If the private marginal cost of producing X is constant at $3, what is the socially optimum quantity of X*? Calculate and use a diagram to depict. b. When comparing projects, why is it problematic to pick the project with the highest ratio of benefits-to-cost (BCR)? What is the preferred indicator? c. How do income and substitution effects explain why it is difficult to predict if savings (and or work) will increase or decrease in response to changes in taxes on interest (and or wage)? Use a diagram to support your answer.Indicate whether you believe the answer is true, false or uncertain and briefly explain your answers. A paragraph is usually sufficient. Mote that some questions contain an initial staternent that you should accept as true, and a follow-up statement that you should evaluate. a. Falling transport costs increase trade more with distant countries, not neighbors. b. Neighborhoods are trapped into poverty because of a culture of poverty and negative peer effects, not the lack of economic opportunity. c. When wages fall, the utility gains of \"outsider\" identity becomes more important and a barrier to holding jobs and integrating with the mainstream socio-economic system. d. Competition among suppliers of public services will typically lower quality

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