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Author Question: If the government places a 1500 tax on each hybrid car sold A) consumers will stop buying hybrid ... (Read 79 times)

Sufayan.ah

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on: Jul 1, 2018
If the government places a 1500 tax on each hybrid car sold
 
  A) consumers will stop buying hybrid cars.
  B) the supply curve will shift left by up to 1500, depending on the price elasticity of demand.
  C) the supply curve will shift to the right by 1500.
  D) None of the above.

Question 2

In the presence of a negative externality generated by producing a good, a competitive market will produce more of that good than is socially optimal.
 
  What will be an ideal response?


T4T

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Reply #1 on: Jul 1, 2018
Answer to Question 1

D

Answer to Question 2

True. Firms in that market only consider their private costs and produce a quantity that equates price with the private marginal cost. Producers ignore the external costs to others. As a result, p = instead of p = MCs.


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Sufayan.ah

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Reply #2 on: Jul 1, 2018
Correct answers!


T4T

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Reply #3 on: Jul 1, 2018
Great! Please up vote :D


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