3. Epoints) Assume that the city government announces that public parks in the city belong tothe public and from now on the public will be responsible for keeping the parks clean and thegovernment will no longer perform that function. Will the city parks be clean after this change ingovernment policy? Please give an explanation which includes the concept of the free-riderproblem.4. (pres) If I decide to play loud music late at night, how can this impose a negativeexternality on my neighbors? You must not only explain how the impact is negative but also whythe impact is considered an externality. Please give an explanation.

Question 3: Public Responsibility for Parks and the Free-Rider ProblemWhen the city government…

Answered: 3. Epoints) Assume that the city…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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22.) Consider a market subject to a negative externality cause by pollution. Suppose that, initially, the government is dealing with this negative externality using a Pigouvian tax. The government is considering switching its handling of the negative externality to a scheme where it auctions off pollution licenses to producer instead. If the government makes this policy change, then producer surplus will and government surplus will a.) Increase, increase b.) Decrease, decrease c.) Decrease, increase d.) None of the above 23.) Suppose that Larry, Moe, and Curly's individual demand curves for statues built in their town park are given by PıD =100–QP_PMD =200–2Q", and Pc³ =300–3Qº respectively. What is the slope of the MBS curve for statues? а.) -4 b.) -5 с.) -6 d.) -7 24.) Suppose that, in the above example, statues are sold in a competitive market with a supply curve given by PS =516+QS. What quantity of statues should the local government install in the park to maximize total surplus?…
1. Which of the following statement(s) is correct? (x) If a tax shifts the supply curve upward (or to the left), but the demand curve does not shift, we can infer that the tax was levied on both buyers and sellers of the good. (y) Suppose a tax is imposed on the sellers of cigarettes. The burden of the tax will be shared by the buyers and sellers of cigarettes but not necessarily equally. (z) When a tax is levied on sellers of a good, a wedge is placed between the price buyers pay and the price sellers effectively receive (and keep). (x). (y) and (z) A. B. (x) and (y) only C. D. E. (x) and (z) only (y) and (z) only (z) only
2. Externality. The table below lists the expected daily benefits between a resident that owns a tree and a neighbor who receives benefits from the neighbor's tree in terms of a providing a green canopy, a view, and sheltering wildlife. The owner of the tree receives benefits from having the tree on his yard but must also bear the costs of watering and maintaining the tree. The question is who owns the right to decide if the tree should be cut down or not. Assume both parties can negotiate at zero cost Homeowner Neighbor Tree Stays $25 $35 Tree is Cut Down $40 $30 a. Based on total benefits should the tree survive or be cut down? Explain? b. If the Homeowner were assigned the right to decide the fate of the tree, what would happen to the tree? Explain. c. If the Neighbor were assigned the right to decide the fate of the tree, what would happen to the tree? Explain. Could the Homeowner negotiate with the Neighbor for a different solution? Explain
(Figure: The Quantity of Pollution in Coal Production) Use Figure: The Quantity of Pollution in Coal Production. Whe this economy produces 50 tons of emissions: MSB, MSC 200 150 100 50 MSB 200 Quantity of pollution emisions (tons) it is producing below the socially optimal level of output. the marginal social cost equals the marginal social benefit. it is producing at its socially optimal level of output. the marginal social cost is greater than the marginal social benefit. 0 50 MSC 100 150
Harvesting forests and other natural resources is one alternative that is useful for funding schools and other public services (Figure 2). Explain what is meant by "payments in kind".
8. Property rights and market failures Loggers are much In the presence of market failures, public policy can improve economic efficiency. Classify the source of market failure in each case listed. Market Failure A person smoking in a restaurant emits second-hand smoke that harms other restaurant patrons. There is only one car dealership in a small town, giving the dealership the ability to influence the price of cars. likely to supply wood to the market if property rights are enforced. Market Power Externality
6
3. Indicate whether the following are private goods, club goods, common-resource goods, or public goods: a. A bacon double cheeseburger b. An NHL hockey game between the Detroit Red Wings and Boston Bruins c. A Fourth of July fireworks show d. A swimming pool e. a vaccination for the flu f. streetlights ← + 00 8
(Figure: Efficiency and Pollution in the Market for Vehicle Emissions) Use Figure: Efficiency and Pollution in the Market for Vehicle Emissions. Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society. The socially optimal quantity of pollution is ____ tons.
3. The effect of negative externalities on the optimal quantity of consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant marginal external cost (MEC) of $175 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for paper. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $175 per ton. PRICE (Dollars per ton of paper) 500 450 400 350 300 250 200 150 100 50 0 0 O O 2 0 3 U 5 QUANTITY (Tons of paper) The market equilibrium quantity is O O 6 Supply (MPC) Demand (MPB) 7 MSC tons of paper, but the socially optimal quantity of paper production is To create an incentive for the firm to produce the socially optimal quantity of paper, the government…
12. Give an example of a public good, and explain why it is a public good. What would happen if we relied only on a free market to produce and sell this public good?? How do you think this public good should be provided? (this last question is supposed to be a matter of personal opinion)
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