Definition of Marginal External Cost in the Weevokil Banana Model
In the context of the Weevokil banana market, the marginal external cost (MEC) is specifically defined as the marginal cost that the fishermen experience as a result of the plantations' banana production.
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CORE Econ
Introduction to Microeconomics Course
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
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Components of Fishermen's Utility in the Weevokil Model
Definition of Marginal External Cost in the Weevokil Banana Model
A group of fishermen earns income from two sources: a fixed salary from part-time work, and profits from fishing in a local river. A nearby banana plantation's production (represented by quantity Q) pollutes the river, which directly reduces the fishermen's profits from fishing. As the plantation produces more bananas, the pollution worsens, and fishing profits decrease at an increasing rate. Which of the following utility functions, U(Q), most accurately models the fishermen's overall well-being based on this situation?
Modeling Utility with Externalities
Constructing a Utility Function with an Externality
Harvest Shortfall and Price Impact
Within a model where fishermen's well-being is negatively impacted by pollution from banana production (Q), a valid way to represent their utility is as a single, unified function that increases with Q, assuming that greater banana output also boosts the overall local economy, benefiting the fishermen indirectly.
The utility (overall well-being) of a group of fishermen is modeled by the function
U(Q) = 5000 - 2Q^2, where Q is the quantity of bananas produced by a nearby plantation. Match each term from this model to its correct description.An independent farmer, who keeps all the food she produces, is trying to decide how many hours to work. At her current choice of 16 hours of free time and 9 bushels of grain, she determines two things: 1) She would be willing to give up 4 bushels of grain for one more hour of free time. 2) Her production schedule shows that if she works one hour less (gaining one hour of free time), her grain output will fall by only 3 bushels. Based on this information, what should the farmer do to increase her overall satisfaction?
Justifying the Structure of a Utility Function with an Externality
A community of shrimpers' overall economic well-being (utility) is negatively affected by the output (Q) of a nearby coastal factory. Their utility is modeled by the function
U(Q) = 25,000 - 10Q^2. In this model, what is the economic interpretation of the component25,000?A community of fishermen's overall well-being (utility) is modeled by the function
U(Q) = 50,000 - 4Q^2, where Q represents the tons of output from a nearby chemical plant that pollutes their fishing grounds. Initially, the plant produces 20 tons of output. Due to new environmental regulations, the plant reduces its output to 15 tons. What is the resulting change in the fishermen's total utility?
Learn After
A banana plantation's production process pollutes a nearby river. When the plantation increases its weekly output from 50 tons to 51 tons, the total weekly profit for a downstream fishing cooperative decreases from $2,000 to $1,980 due to the additional pollution. Based on this information, what is the marginal external cost of the 51st ton of bananas?
Analyzing Production Externalities
True or False: In a market where a banana plantation's production pollutes a river, if the total financial harm to downstream fishermen increases at a decreasing rate with each additional ton of bananas produced, this implies that the marginal external cost is increasing.
Defining Production Externalities
A banana plantation's production process creates runoff that harms a downstream fishing business. The table below shows the total weekly profit for the fishing business at different levels of banana production. What is the marginal external cost imposed on the fishermen when the plantation increases its production from 3 tons to 4 tons of bananas per week?
Banana Production (Tons/Week) Fishermen's Total Profit ($/Week) 0 1000 1 980 2 940 3 880 4 800 5 700 Calculating Total External Cost from Marginal Data
Distinguishing Total vs. Marginal External Costs
A banana plantation's production process pollutes a nearby river, which negatively affects the profits of a downstream fishing business. Match each economic term to the description that best represents it in this specific scenario.
A banana plantation's production (Q, in tons) imposes a total external cost (TEC, in dollars) on a downstream fishing business, described by the function TEC(Q) = 20Q + 3Q². Which of the following expressions correctly represents the marginal external cost (MEC) of banana production?
Explaining and Differentiating External Costs