(a) Identify the type of market failure, explain why it occurs and provide a solution (i) An auto repair shop convinces you that you need a $20,000 valve job when all you need is an oil change. (ii) Everyone in the neighbourhood would benefit if an empty lot were turned into a park but no entrepreneur will come forward to finance the transformation (iii) A barking dog in the backyard (b) Define the tragedy of the commons in your own words. (c) Why are fish in the ocean an example of a resource that suffers from the tragedy of the commons but cattle grazing in a farmer’s pasture does not suffer from the tragedy of the commons?
Question 1
A global-positioning anti-theft device installed by one car owner can produce a positive spillover to other citizens in a community. Discuss the impact on the:
(i) Private benefit curve
(ii) Social benefit curve
(iii) Private cost curve
(iv) Social cost curve
(v)
(vi) Efficient level of output
(a) Identify the type of market failure, explain why it occurs and provide a solution
(i) An auto repair shop convinces you that you need a $20,000 valve job when all you need is an oil change.
(ii) Everyone in the neighbourhood would benefit if an empty lot were turned into a park but no entrepreneur will come forward to finance the transformation
(iii) A barking dog in the backyard
(b) Define the tragedy of the commons in your own words.
(c) Why are fish in the ocean an example of a resource that suffers from the tragedy of the commons but cattle grazing in a farmer’s pasture does not suffer from the tragedy of the commons?
please provide answers for all questions. thanks.
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