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- Externalities are a form of market failure. Identify two externalities related to Covid-19, one positive and one negative. Graph and explain how each externality affects the optimal amount of the good that is generating the externality.Suppose two parents present their 16-year-oldwith a list of the cars that they will allow him tobuy. If the parents decide to add another vehicle tothe list, is that affecting the choice architecture fortheir son? Why or why not?What is the efficient outcome in this market? Equivalently, which types of bikes should changetheir owners to maximise the social welfare?
- What is Mauricio's budget for monkeys and unicycles?7 This figure below shows the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive. 1 Sarah points Lew Effont High Effert 00:40 25 Low Effort Joe High Effon The outcome of the game in the figure shown will be: Multiple Choice Joe puts forth high effort and Sarah puts forth low effort. Joe puts forth low effort and Sarah puts forth high effort. Joe and Sarah both put forth low effort. Joe and Sarah both put forth high effort.Freds enjoys smoking cigars but cigar smoke makes his wife , Wilma feels ill. Use a graph to show that Fred's consumption of cigars will be inefficient if he ignores the costs imposed on Wilma.
- Eleanor is a talented artist who sells hand-crafted goods on her website. Eleanor currently crafts and sells both picture frames and cutting boards. She spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of her time is spent on each good. CUTTING BOARDS A Hours Crafting Choice (Picture frames) (Cutting boards) (Picture frames) (Cutting boards) 30 20 25 10 5 0 с D E B 0 1 8 6 2 4 On the following graph, use the blue points (circle symbol) to plot Eleanor's initial production possibilities frontier (PPF). 2 0 3 5 PICTURE FRAMES 0 2 4 4 6 8 6 7 4 3 2 1 0 8 Produced O Initial PPF 0 New PPF 11 16 19 20 Suppose Eleanor is currently using combination D, producing one picture frame per day. Her opportunity cost of producing a second picture frame per day is per day. Now, suppose Eleanor is currently using combination C, producing two picture frames per day. Her opportunity cost of producing a third picture frame per day is…Please label the graph point where the socially optimal equilibrium is1. Hatfield and McCoy hate each other. The only good they both consume WH W2 40 Mand McCoy's is whiskey. Hatfield's utility function is UH utility function is UM = WM-W, where WHI is Hatfield's consumption 40' Η of whisky and WM is McCoy's consumption of whiskey. The sheriff has confiscated a total of 60 litres of whiskey which he could give back to them or throw in the creek. Say that the Sheriff wants them both to be as well off as possible and weighs their "happiness" equally. How much whiskey should the sheriff give to each of them? Should he throw any whiskey in the creek; if so how much? =
- A salesperson introduces a mobile-data plan to Michael, which allows him to pay HK$200 per month and enjoy 20G of data usage. Michael said he is happy with the plan and is willing to subscribe to it. Note that Michael will use more than 20G of data when it is free-of-charge.Explain the above Michael's decision by using a graph/graphs based on the concept of marginal utility/happiness, consumer surplus and marginal cost.ECONOMICS Please Show Your Work With an Explanation This problem set explores what happens to pricing when we add network effects, which are a specific form of positive externality. You’ve invented a 3D fax machine. This cool technology is almost like a Star Trek teleporter. You can scan an object at one machine, which creates an exact copy at another 3D fax machine. It is so valuable that as more people use it, it becomes more valuable, and the price any given user is willing to pay increases in turn. Consider a scenario in which there are 12 possible users, who each value the fax machine at i*n, where i is the index of that user (from 1 to 12), and n is the number of other purchasing users. So, if no one buys the 3D fax machine, everyone values it at 0. However, as soon as one person buys the device, then the 12 possible users begin to value the product at 1, 2, … 12, respectively. If 2 people purchase, the 12 possible users’ valuations increase to 2, 4, … 24, and so on. Because…Table 17-1Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Rochelle and Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: Quantity(in gallons) Price Total Revenue(and Total Profit) 0 $60 $0 100 55 5,500 200 50 10,000 300 45 13,500 400 40 16,000 500 35 17,500 600 30 18,000 700 25 17,500 800 20 16,000 900 15 13,500 1,000 10 10,000 1,100 5 5,500 1,200 0 0 Refer to Table 17-1. If this market for water were perfectly competitive instead of…