May you please help me with the multiple choice on exercise 2 and the table on exercise 3?
uld pollution be reduced annually from 5 units to 4?_ What is the optimal rate of pollution? Which of the following is true concerning the lake ? benefits achieved. (a) The optimal rate of pollution has been reached when the lake is totally free of pollution. 3. The effect of the decision to pollute on the quantity of chemicals sold is the same as if: ( b) The marginal social costs incurred in eliminating all pollution would exceed the marginal social (a) A new, improved technology were discovered. social benefits achieved. (b) Wages to its labor force were reduced. (c) The marginal social costs incurred in eliminating all pollution would be less than the marginal (c) The Social Security tax on employers had been abolished. (d) All of the above were the case. Exercise 2 exceeds the costs of treating the polluted water. (d) Pollution should be eliminated as long as the monetary value of the damages caused by pollution 4. As a result of the chemical plant's polluting activities: (a) The price of chemicals has risen. (b) The price of chemicals has fallen. problems in the text. (c) The price of plastics has not changed. (d) None of the above is the case. This exercise shows how externalities affect third parties. This exercise will help you complete the 5. As a result of the chemical plant's activities: (a) More chemicals are produced and sold than society desires. (b) More labor is used to produce chemicals than society desires. A chemical plant and a plastics factory are located adjacent to the same stream. The chemical plant is basic supply is the stream that runs past both firms. (c) More capital inputs are used to produce chemicals than society desires. located upstream. The downstream plastics factory requires pure water for its production process. Its (d) All of the above are the case. 6. The effect of the chemical firm's pollution is to: Figure 13.1 (a) Raise the price of plastics and reduce the quantity sold. (b) Lower the price of plastics and increase the quantity sold. Plastics Markets for plastics and chemicals (c) Raise the price of plastics and increase the quantity sold. (d) Do none of the above. Chemicals 7. The impact of the pollution on the plastics industry in this example is, ceteris paribus, to: (a) Reduce the output of plastics below the level that society desires. X X (b) Reduce the employment possibilities in the plastics industry. (c) Raise the price of products made with plastics. (d) All of the above. Exercise 3 This exercise shows the difference between private marginal costs and social marginal costs. 1. An iron-producing firm mines iron ore. Assume the iron ore industry is competitive. Table 13.2 TONS PER WEEK depicts the private costs and social costs of the firm's iron production at each daily production rate. Complete Table 13.2. TONS PER WEEK Table 13.2 Costs of producing iron In Figure 13.1, diagrams a and b, S, and D. represent the supply and demand for plastics and chemicals, respectively. Assume that the economy is initially competitive and resources are allocated efficiently. Equilibrium price and quantity are P. and Q in each case. Then the chemical producer decides to dump Production Total Private Total Social waste products into the stream rather than dispose of them with the costly process that had been used. rate private cost marginal cost social cost marginal cost (dollars per day) dollars per ton) (dollars per day) (dollars per ton) (tons per day) 1. In Figure 13.1 diagram b, draw in a new supply curve for chemicals after the dumping in the stream begins. Label it S. (Hint: There are many ways to draw the curve.) $ $ 40 90 170 150 270 The pollution from the chemical plant forces the plastics manufacturer to use a costly water-purifying 380 many ways to draw this curve correctly.) system. Draw a new supply curve for plastics in Figure 13.1 diagram a. Label it S,. (There are 220 300 500 390 630 490 770 600 920 720 1,080 850 1,250 192 990 1,430 1,140 1,620 193
