For the next two questions, suppose the production of cigarettes creates external costs, but no external benets. Letting Q denote the production of cigarettes: MB = \"ID - Q, while MPC = 20 and MSC = 40. In response to the negative externality, the government imposes a tax ton each pack of cigarettes, raising private costs to MPG = 20 + t. What is the socially optimal production level of cigarettes? It is closest to: Select one: 0 a. 1 O b. 2 O c. 3 0 d. 4 Calculate the tax rthat would induce the cigarette manufacturer to produce at the socially optimal level. The tax tis closest to: Select one: 0 a. 1 O b. 2 O c. 3 0 d. 4 Oe.5 For the next five questions, assume that Firm Alpha can leave its windows uncovered or pay to install shutters on its windows. Whether the shutters are installed has an effect on Firm Beta's profit, as illustrated in the table below. Firm Alpha Profit |Firm Beta Profit Alpha does not install shutters $800 $200 Alpha installs shutters $700 $500 Does the shutter installation create a positive or a negative externality? Select one: O a. A positive externality O b. A negative externality O c. No externality Clear my choice Is it efficient for the shutters to be installed? Select one O a. Yes O b. No O c. Not Sure Suppose that Firm Alpha has the property rights. What will happen if the firms negotiate? Select one: O a. Beta will pay Alpha something between $50 and $100 to install the shutters. O b. Beta will pay Alpha something between $100 and $300 to install the shutters. O c. Beta will pay Alpha something between $300 and $500 to install the shutters. Suppose that Firm Beta has the property rights. What will happen if the firms negotiate? Select one: O a. Beta will pay Alpha something between $50 and $100 to install the shutters. O b. Beta will pay Alpha something between $100 and $300 to install the shutters. O c. Beta will pay Alpha something between $300 and $500 to install the shutters. O d. Beta will order Alpha to install the shutters, with no transfer.For the next two questions, assume that Tarzan and Jane live alone in the jungle and have trained Cheetah to patrol the perimeter of their camp and to harvest fruits. Cheetah can collect 3 pounds of fruit per hour, but Tarzan and Jane would each be willing to give up one hour of patrolling for 2 more pounds of fruit. Assume Cheetah currently spends 10 hours patrolling and 14 hours picking fruit. Is the current allocation of Cheetah's time efficient? Select one: O a. Yes O b. No O c. Not enough information to answer this question If the current allocation of Cheetah's time is not efficient, should he (Cheetah) patrol more or less? Select one: O a. He should patrol more O b. He should patrol less O c. He should do whatever he wants.For the next two questions, assume that there are 1000 residents of a town, each of whose marginal benefit (willingness to pay) for having x miles of roads is P = 100 - 5x. Roads are built competitively at a marginal cost of MC = 2000 per mile. Roads are a public good What is the efficient level of roadway construction? It is closest to: Select one: O a. 0 O b. 19.5 O c. 19.6 O d. 19.7 O e. 19.8 Of. 19.9 O g. 20 If residents decide on road building independently, how many miles of roadway will be built? It is closest to: Select one: O a. 0 O b. 19.5 O c. 19.6 O d. 19.7 19.8 Of. 19.9 O g. 20