D Question 12 1 pts Problem 6: Externality (6 points) The weekly supply and demand for packs of cigarettes in the United States is given in the figure below. Suppose cigarette smoking causes an external cost on nonsmokers, as shown by the social benefit curve on the graph. Price $20 $18 $16 S=MC PV= MCsocial $14 $12 $10 $8 $6 $4 $2 MB social MB on 5 10 15 20 25 30 35 40 45 50 Packs of cigarettes (millions) a. This is a [ Select ] externality. D Question 13 3 pts b. How much is the external cost (in $ per pack)? $ c. Without any intervention into the market, how many million packs of cigarettes are consumed per week? million What is the efficient (or socially optimal) number of cigarette packs? million d. Without intervention in this market, what is the deadweight loss that arises as a result of the externality? Locate the area on the graph and calculate the dollar value. . million D Question 14 2 pt e. Suppose the government wants to internalize the externality and bring the market to the socially optimal quantity. Describe two policy options that you would recommend. Be specific about the exact amounts of each intervention. Think about what type of externality this is (positive or negative) and the policy options discussed in this chapter. We have taxes/subsidies, quotas, and tradable permits, as well as direct regulations (also known as command and control). If you're proposing a tax or subsidy, be sure to give the per-unit amount. For a quota or tradable permit, include the number of quota units and/or permits. Edit View Insert Format Tools Table 12pt Paragraph B JU Av & TV