The social cost is given by 10 + 1.5Q. Coase Theorem (Part II): The eﬃcient quantity for a good producing an externality does not depend on which party is assigned the property rights, as long as someone is assigned those rights. We use cookies to … One way governments can charge firms for pollution rights is by imposing a per-unit tax on emissions. When 2,500 units of good x are produced, the a. external cost of … socially optimal market quantity. Q 29 Q 29. at this point, consumer and producer surplus is maximized. b. The difference between privately and socially optimal travel quantity Δ q i = q i ' − q i ∗ can be used to measure the strictness of travel restrictions or city lockdown. Discussion. The marginal private cost function is the inverse … This is the optimal distribution of resources in society, taking into account all external costs and benefits as well as internal costs and benefits. B) is more than the socially optimal quantity. the quantity exchanged will be less than the socially… Equilibrium Quantity: Economic quantity is the quantity of an item that will be demanded at the point of economic equilibrium . are motivated by quantity-based policies, then the relevant question is what recycling rate is socially optimal. Answer. Multiple Choice . O positive externalities are likely to exist. Jodi Beggs/ThoughtCo. A)50 B)75 C)100 D)125. Social Efficiency occurs at an output where Marginal Social Benefit (MSB) = Marginal Social Cost (MSC). If the socially optimal quantity of the good is 200 pounds, there is a _____ externality, so the government should enact a _____ per pound to increase market efficiency. To correct this, the government should select the price at which average revenue equals average total cost. The socially optimal price or aka allocation efficiency occurs where MC = AR ; where Supply = Demand. Unlock to view answer. Refer to the figure below. A tax (or price in this case) of . Just the municipal costs of operating recycling programs have been examined by the literature. The socially optimal quantity of pollution occurs where: (Points: 1) the marginal social benefit of pollution is equal - Answered by a verified Tutor. This is the point at which the firm makes zero economic profit, produces the socially optimal quantity of goods, and sells at the socially optimal price. Correct answers: 1 question: Suppose the government has determined that the socially optimal quantity of sulfur dioxide emissions is 125 million tons per day. 6 In this case only consumer groups 1 and 3 are going to provide the good because consumer group 2 is unwilling to demand a quantity greater than 40/3 units of the public good. So, from a society point of view, we lost out on all of this quantity where the marginal social … The following texts are the property of their respective authors and we thank them for giving us the opportunity to share for free to students, teachers and users of the Web their texts will used only for illustrative educational and scientific purposes only. The socially optimal firm size is the size for a company in a given industry at a given time which results in the lowest production costs per unit of output. C) equals the socially optimal quantity. If a monopoly was regulated to produce at the socially optimal level of output, it would produce where the price (AKA demand) intersects the marginal cost curve (P=MC). The socially optimal quantity is Q = 56. Defining property rights: Private property rights are one of the preconditions for the existence of market economies. Thus the socially optimal quantity is given by 150 – Q = 10 + 1.5Q. C) produce the socially optimal quantity of a good. d. 6 units. This graph describes a good that: A)generates positive externalities. 33) The existence of externalities is due mainly to the fact that 33) _____ A) pollution is not a serious problem. (Note that deadweight loss is always associated with the suboptimal market outcome.) 12 41. If output occurs at any other level, a market failure exists. Answers: 1, question: Suppose the government has determined that the socially optimal quantity of sulfur dioxide emissions is 125 million tons per day.