#10. When traffic gets congested, there are negative externalities. For big cities, this creates inefficiency.Could the Coase Theorem fix this problem?a. Yes, it can. The government could assign property rights: X number of drivers can be on the road duringpeak hours. Everyone could then negotiate an efficient solution.b. No, because bargaining costs are too high.c. No, because the government doesn't have enough information to solve the problem.d. Both b and c.

option b is the correct answer No because bargaining cost too high The Coase theorem proposes…

Answered: #10. When traffic gets congested, there…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Externalities can be ________ by collective (i.e.) ________ action. a. enhanced // market b. internalized // market c. internalized // government d. externalized // government
How does Coase's theorem solve the problem of externalities without the need for government intervention?
Describe externalities as a source of market failure with the aid of a clearly labeled diagram.
Market failure occurs when the private sector fails to distribute our resources efficiently through the pricing system. Externalities and a lack of public goods and services are two examples of market failure.Give an example of a positive and a negative externalities that someone faces in their life. Also, what are some public goods and services that you utilize in your everyday life?
How can we increase the Total Revenue of products by using elasticity?
What are the two characteristics of public goods? Explain the significance of each for public provision as opposed to private provision. What is the free-rider problem as it relates to public goods? Is U.S. border patrol a public good or a private good? Why? How about satellite TV? Explain.
Explain why zoning laws, which allow certain land uses only in specifific locations, might be justifified in dealing with a problem of negative externalities. Explain why tax breaks to businesses that set up in areas of high unemployment might be justified in view of positive externalities. Explain why excise taxes on beer might be justifified in dealing with a problem of external costs.
Smokers impose negative externalities on nonsmokers. Suppose the airspace in a restaurant is a resource owned by the restaurant owner. How would the owner respond to the negative externality caused by smokers? Suppose smokers own the airspace. How would that change matters? If the government gives ownership of the air to nonsmokers, would that change matters? Explain your answer. What does a ban on smoking in the restaurant do?
Suppose golden retrievers create positive externalities because they are cute and people like seeing them at the park. Which of the following is true? A) The social supply curve is to the left of the private supply curve. B) The social supply curve is to the right of the private supply curve. C) The social demand curve is to the left of the private demand curve. D) The social demand curve is to the right of the private demand curve.
What do laboratory experiments on the free-rider problem show? People do not contribute anything to the public good People contribute to the public good, but less than is optimal People contribute the optimal amount to the public good
John loves playing country music at high volume. Mike loves opera but hates country music. Unfortunately, they are next-door neighbors in an apartment building with paper-thin walls. a. What is the negative externality in this situation? b. What command-and-control policy might the landlord impose? c. Could a command-and-control policy cause an inefficient outcome?d. Suppose the landlord lets the tenants do whatever they want. Using the Coase theorem, how might John and Mike reach an efficient outcome on their own?
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