/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q.2 Identify whether the market supp... [FREE SOLUTION] | 91影视

91影视

Identify whether the market supply curve will shift right or left or will stay the same for the following:

a. Firms in an industry are required to pay a fine for their carbon dioxide emissions.

b. Companies are sued for polluting the water in a river.

c. Power plants in a specific city are not required to address the impact of their air quality emissions.

d. Companies that use fracking to remove oil and gas from rock are required to clean up the damage.

Short Answer

Expert verified

(a) The supply will shift to the left.

(b) The supply will shift to the left.

(c) The supply stays the same.

(d) The supply will shift to the left.

Step by step solution

01

Market supply curve : 

The market supply diagram is a curve which shows that each market participant is interested in producing how much of a product at a particular price.

02

(a) Explanation :

If firms are required to pay a higher penalty for generating carbon dioxide, price will rise, causing supply to go out of balance, and demand to fall.

If the good is a necessary item and the firm pays the extra fine out of their own pocket, there will be no change in supply; however, in a perfect competition market, the firm will always pass on the extra fine to the customers who pay it, resulting in a drop in demand and supply that makes the supply curve move to the left.

03

(b) Explanation :

Companies that are penalized for polluting the river will have a limited supply of the item.

If a negative externality occurs, resulting in firms paying a fine and polluting the river, consumers will want less of the good, resulting in a shortage of the item that makes the supply curve move to the left.

04

(c) Explanation : 

If a power plant in a certain city is not required to monitor or handle air quality emissions, the producer's market supply will remain unchanged, and the consumer's demand would remain unchanged. So, the supply curve remains constant.

05

(d) Explanation : 

The supply would shift to the left if firms used fracking to extract oil and gas from the rock and were compelled to clean up the mess.

If the price is low and the producer has absorbed it, rather than passing it on, the supply will move to the left.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What are the three problems that economists have noted with regard to command-and-control regulation?

As the extent of environmental protection expands, would you expect marginal costs of environmental protection to rise or fall? Why or why not?

For each of your answers to Exercise 12.2, will equilibrium price rise or fall or stay the same?

Table 12.5 provides the supply and demand conditions for a manufacturing firm. The third column represents a supply curve without accounting for the social cost of pollution. The fourth column represents the supply curve when the firm is required to account for the social cost of pollution. Identify the equilibrium before the social cost of production is included and after the social cost of production is included.

In the Land of Purity, there is only one form of pollution, called 鈥済unk.鈥 Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose.

a. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis.

b. Which choices display productive efficiency? How can you tell?

c. Which choices show allocative efficiency? How can you tell?

d. In the choice between K and L, can you say which one is better and why?

e. In the choice between K and N, can you say which one is better, and why?

f. If you had to guess, which choice would you think is more likely to represent a command-and- control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?

See all solutions

Recommended explanations on Economics Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.