Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter11: Public Goods And Common Resources
Section: Chapter Questions
Problem 2PA
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Question
![(a) Shortly explain the relationship between elasticity of a good and the consumption tax rate it
should be imposed upon it.
(b) What do we man by rivalry of a good? Give examples of rival and non-rival goods. To what
extent is rivalry a crucial aspect of a public good?
(c) Give examples of positive and negative production and consumption externalities. (so you need
to give 4 examples in total)
(d) Explain whether the Coase theorem is useful in practice.
(e) Define vertical and horizontal equity objectives of a tax system. Which one do you think is more
important in establishing equity and/or fairness?
(f) What are the political implications of the First and Second Welfare theorems? Shortly explain. 3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0a33f2f-729e-434c-a087-b91a6784df4a%2F9ce4ff22-ae7a-487d-bae0-1bf307ac4c10%2Fzw1mk6_processed.png&w=3840&q=75)
Transcribed Image Text:(a) Shortly explain the relationship between elasticity of a good and the consumption tax rate it
should be imposed upon it.
(b) What do we man by rivalry of a good? Give examples of rival and non-rival goods. To what
extent is rivalry a crucial aspect of a public good?
(c) Give examples of positive and negative production and consumption externalities. (so you need
to give 4 examples in total)
(d) Explain whether the Coase theorem is useful in practice.
(e) Define vertical and horizontal equity objectives of a tax system. Which one do you think is more
important in establishing equity and/or fairness?
(f) What are the political implications of the First and Second Welfare theorems? Shortly explain. 3
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