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3 years ago

why is government intervention often crucial when dealing with both positive and negative externalities?

Business

1 answer:

Dennis_Churaev [7]3 years ago

6 0

Answer:

Because the government can use her sovereign power to both mitigate negative externalities as well as encourage positive externalities.

Explanation:

A positive externality occurs when the transaction between a producer and end user benefits a third party that did not take art in the process.

A very Good example is Education. There is a third party benefit to the society when we have more educated citizens.

A negative externality happens when the business transaction between a manufacturer and consumer affects a third party adversely. a typical example is cigarettes. When cigarettes is consumed by the end user, the smoke can affect the health of a third party that was not part of the initial transaction.

To deal with both positive and negative externalities, government intervention is very crucial.

Government encourages positive externalities like education by subsidizing the cost of attending a school. They also enact laws that make basic education compulsory.

In the case of negative externalities, Government can intervene with a ban on producing harmful goods and also set a legislation about smoking in public laces to mitigate the health complications caused by third party inhalation.

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Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to

Pie

Answer:

d. Equilibrium price will increase, equilibrium quantity will decrease"

Explanation:

"Ceteris paribus" all things being equal; the higher the price, the lower the quantity demanded. If there are speculations about possible increment in price of wheat in near future time, it will result into panic buying of wheat in the market today and that will definitely increase the equilibrium price of the wheat and decrease the equilibrium quantity of wheat demanded.

7 0

3 years ago

Read 2 more answers

The Baldwin company will sell 100 units (x1000) of capacity from their Buddy product line. Each unit of capacity is worth $6 plu

stiv31 [10]

Answer:

Amount received = $2,210,000

Explanation:

given data

sell = 100 units (x 1000)

capacity = $6 + $4 per automation rating

sell capacity = 35%

to find out

how much they receive when the capacity is sold

solution

we consider here Automation rating is 7.0

we get here first Cost per unit that is here as

Cost per unit = 6 + 4 × 7

Cost per unit = 34

and capacity worth will be here as

capacity worth = Cost per unit × sell units

capacity worth = 34 × 100000

capacity worth = 3,400,000

so that here Amount received will be as

Amount received = capacity worth × ( 1 - sell capacity )

Amount received = 3400000 × ( 1 - 35% )

Amount received = $2,210,000

6 0

3 years ago

Durable goods are: a. consumers' goods b. raw materials combined to produce consumer goods c. those that must be replaced after

Leokris [45]

Answer:

d. those that may be stored and repaired

Explanation:

Durable goods are those goods that are stored and repaired. It is to be considered for the long-lasting so it can be stored. Also it can be repaired when they wear out

For example: mobile phone, table, chair, toys, etc

Therefore as per the given situation, the option d is correct

And, the remaining options are to be considered

3 0

3 years ago

Cost of Goods Manufactured for a Manufacturing Company

aniked [119]

Answer:

Cost of goods manufactured $ 2567,400

Explanation:

Ethtridge Manufacturing Company

Statement of Cost of Goods Manufactured

For the Month Ended July 31

Direct materials $1,150,000

Direct labor 966,000

Total factory overhead 490,500

Total manufacturing costs $ 2606500

Add July 1 Work in process inventory, 316,400

Cost of Goods Available for manufacture $ 2922,900

Less July 31 Work in process inventory, 355,500

Cost of goods manufactured $ 2567,400

When we add the direct materials. direct labor and FOH we get the total manufacturing costs .

When the total manufacturing costs are added to the opening work in process inventory we get the cost of goods available for manufacture and we get the cost of goods manufactured by subtracting the ending work in process inventory from the cost of goods available for manufacture.

6 0

3 years ago

Bretthauer Corporation has provided data concerning the Corporation's Manufacturing Overhead account for the month of July. Prio

skad [1K]

Answer:

a) Manufacturing overhead applied to Work in Process for the month was $70,000

Explanation:

Data provided in the question

The total of the Manufacturing Overhead account = $58,000 i.e incurred

And, the total of credit to the account = $70,000 i.e applied amount

So according to the given data, the manufacturing overhead should be applied to the work in process with the total credit amount i.e $70,000

Hence, the first option is correct

4 0

3 years ago