can you please answer and graph but break it down step by step.
98 CHAPTER 4 THE PUBLIC SECTOR CHAPTER 4 THE PUBLIC SECTOR NEGATIVE EXTERNALITIES 2. Calculate the new supply (with the imposition of the tax) and plot SOLUTIONS it on the above graph. A company has decided to locate its new textbook manufacturing plant on the local river. They have some effluent from the production process that they simply release into the river, and it washes away. When ques- 3. Identify the new quantity demanded. tioned about this practice their response was that it is cheaper than to have the waste byproduct hauled away. In the weeks that followed much discussion took place and eventually the local authorities decided to im- pose a tax on this company of $25.00 per unit for all units of production. 4. If it is true that the original supply curve depicts the private cost of The following graph shows the private cost and private benefit of the producing textbooks given the ability to release effluent into the plant. river, and that the new supply curve (including the tax) depicts the social cost of producing textbooks, what cost do people not $/U associated with the production or consumption of textbooks pay per textbook produced? 100 S. 5. What is the resource allocation problem associated with the presence of significant negative externalities? P 2 P, 6. Explain one market-based solution that would correct for this misallocation of resources. 1. Identify the equilibrium price and quantity for textbooks from the plant See graph 2002 Thomson Learning, Inc. 2002 Thomson Learning, Inc.96 CHAPTER 4 THE PUBLIC SECTOR POSITIVE EXTERNALITIES 2. Calculate the new demand and plot SOLUTIONS Phillipo Epstein, a standout student at Buchanan High School, decided to produce a fireworks show to honor the writing of the Wealth of Nations. 3. Identify the new quantity demander Phillipo would hire a pyrotechnic firm to actually produce the fireworks, and he would charge admission to the event. He made arrangements to rent the field hockey stadium at Buchanan High School to hold the large crowd he expected to attend. The following graph shows the private cost 4. If it is true that the original demand and private benefit that Phillipo anticipated for the fireworks show. Based fireworks shows and that because of on this information he decided to charge $10.00 per person admission. On show from outside the stadium the 1 the actual night of the show Phillipo was shocked and horrified to find demand" for fireworks, then what a out that many of the expected customers simply watched the show from about the likelihood of financial suck outside of the stadium and did not pay the admission fee. After the show fireworks show to celebrate the writ he added up the gate receipts and re calculated demand. The new de- mand was 50% less than Phillipo's original estimate. $/U 5. What is the economic problem assoc significant positive externalities? . Explain one market-based solution to misallocation of resources. Q2 Q1 Quantity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 1. Identify the equilibrium price and quantity for the fireworks show that Phillipo Epstein had originally anticipated See graph @ 2002 Thomson Learning, Inc. @ 2002 Thomson Learning, Inc.CHAPTER 4 THE PUBLIC SECTOR 9? Calculate the new demand and plot it on the above graph. Identify the new quantity demanded at $10 per ticket. . If it is true that the original demand is the \"real" demand for fireworks shows and that because 'of the ability to see the reworks show from outside the stadium the new demand is the "market demand" for reworks, then what conclusion can you come to about the likelihood of financial success for events like the reworks show to celebrate the writing of the Wealth of Nations? What is the economic problem associated with the presence of signicant positive externalities'? Explain one marketbased solution that Would correct for this misallocation of resources
