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Question 7 3 pts Consider again the market for super sparkly shirts. Suppose now that, in addition to the negative consumption externality, there is also
Question 7 3 pts Consider again the market for super sparkly shirts. Suppose now that, in addition to the negative consumption externality, there is also a $16 per shirt positive production externality associated with super sparkly shirts (the manufacture of super sparkly shirts releases glitter into the air, which makes all the local houses and greenery shimmer beautifully). Given both the negative consumption externality AND the positive production externality, the socially optimal quantity of super sparkly shirts is thousand (enter only a number in the blank, and round to the nearest integer if necessary).Question 3 2 pts Question 5 3 pts Consider again the market for super sparkly shirts. In light of In the market for super sparkly shirts, PMB = 56 - 4Q and PMC = 16 your answers to the previous two questions, the deadweight + 40, where private marginal benefits (PMB) and private marginal loss in the private super sparkly shirt market due to the negative consumption externality is costs (PMC) are measured in dollars and quantity (Q) is measured in thousands of shirts. Assuming the market is perfectly competitive, O $0 the private market equilibrium quantity is 5 O $1000 thousand shirts (enter only a number in the blank, and round to the O $2000 nearest integer if necessary). O $3000 O $4000 O $5000 Question 4 O $6000 Question 6 2 pts Consider again the market for super sparkly shirts. Suppose that Consider again the market for super sparkly shirts. To address the negative consumption externality and ensure that the wearing a super sparkly shirt has a negative externality because the private market for super sparkly shirts delivers the socially efficient outcome, the government would need to impose an super sparkles can hurt bystanders' eyes. The damage caused to excise (or Pigouvian) tax of others amounts to $8 per shirt (i.e., the marginal damage is $8). Assuming for now that there are no other market failures in the super O $0 per shirt (i.c.. no tax is required) sparkly shirt market, then taking into account the negative $2 per shirt consumption externality, the socially optimal quantity of super O $4 per shirt O $8 per shirt sparkly shirts is 4 thousand shirts (enter only a O $12 per shirt O $16 per shirt number in the blank, and round to the nearest integer if necessary). O None of the above
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