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Microeconomics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-1260566642Microeconomics 1st Edition by Dean Karlan,Jonathan Morduch
Edition 1ISBN: 978-1260566642 Exercise 3
The weekly supply and demand for packs of cigarettes in the U.S is given in Figure 18P-1.
a. Suppose cigarette smoking causes a $6/ pack external cost on nonsmokers. Draw the demand curve that would exist if the externality associated with smoking were internalized by consumers.
b. How many packs of cigarettes are consumed per week?
c. What is the efficient number of cigarette packs?
d. What would be the total gain in surplus if this externality could be internalized?
a. Suppose cigarette smoking causes a $6/ pack external cost on nonsmokers. Draw the demand curve that would exist if the externality associated with smoking were internalized by consumers.
b. How many packs of cigarettes are consumed per week?
c. What is the efficient number of cigarette packs?
d. What would be the total gain in surplus if this externality could be internalized?
Explanation
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Private cost:
Private cost refers to th...
Microeconomics 1st Edition by Dean Karlan,Jonathan Morduch
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