HW Q 3.(v) Consider the case of provinces constructing dams in the north of India.. (a) Does an externality exist? If so, classify the externality as positive/negative (or both). (b) Use Coase's framework to identify the cause of the externality. (c) If an externality exists, determine whether the Coase theorem applies (i.e. is it possible/reasonably feasible to assign property rights and solve the problem?). Provide a reasoning for your assessment. (d) If an externality exists and the Coase theorem does not apply, discuss a government or institutional solution that can mitigate the problem of externality. Provide a reasoning for your assessment.

HW Q 3.(v) Consider the case of provinces constructing dams in the north of India.. (a) Does an externality exist? If so, classify the externality as positive/negative (or both). (b) Use Coase's framework to identify the cause of the externality. (c) If an externality exists, determine whether the Coase theorem applies (i.e. is it possible/reasonably feasible to assign property rights and solve the problem?). Provide a reasoning for your assessment. (d) If an externality exists and the Coase theorem does not apply, discuss a government or institutional solution that can mitigate the problem of externality. Provide a reasoning for your assessment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Externalities. Consider a firm that causes pollution in a lake affecting a group of individuals. The production cost of the firm is c(q) = cq²/2, where c> 0 and q is the quantity produced by the firm, and the total cost imposed on the individuals (adding the costs suffered by each of them) is (q) = pq²/2, where > 0. (a) Suppose initially that the firm cannot bargain, trade, or otherwise compensate the individuals. Calculate the profit maximizing choice of output by the firm, the revenue of the firm, the private cost of the firm, the externality that the firm imposes over the individuals, and the total social cost. (b) Suppose now that the individuals affected by pollution in the lake own the lake, and that they organize to sell pollution permits, with a price of p, so that the firm must pay p per unit of output. Find the competitive price of pollution permits, as well as the profit max- imizing choice of output by the firm if the firm must buy pollution permits and buys them at the…
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.
BN12.1 (a) (b) Statement: "Externalities arise solely because individuals are unaware of the consequences of their actions." Questions: (a) True or False? (b) Why?
Industrial pollution is often cited as an example of a negative externality, but what about smoking? Most of you grew up in an era when smoking was much less socially acceptable than when your parents and grandparents were young. Both students and instructors used to smoke in the classroom and it was allowed was allowed in many college classrooms as late as the 1970s. Although few, if any, colleges allow smoking in classroom buildings now, many bars and restaurants have smoking sections. (a) would you be willing to pay smokers to not smoke while they are in the same restaurant or (b) would you choose to sit in a restaurant’s smoking section to avoid a longer wait for a table in a nonsmoking section. Discuss the cost of the externality to you and others.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Note: either of (c) or (d) have to be answered, not both, so it is still total 3 parts.
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4. The dollar value of fish caught from Lake Spooky is given by f(b) = 1006 - 56², where b is the number of fishing boats. Fishing boats are costless to buy and operate. What is the optimal tax that the Department of Fish Affairs should impose on fishing boats, so as to avoid the Tragedy of the Commons? (a) $50 per boat (b) $1 per boat (c) $0 per boat (d) $100 per boat