Why are taxes, one traditional remedy for negative externalities, less than ideal for smokingcessation in the United States?a. Nicotine is addictive/demand is inelastic, and smokers are mostly poor, so in effect cigarettetaxes reduce the quality of life of people we're trying to help without substantially reducingsmokingb. Demand is inelastic, and smokers are mostly rich, so they don't reduce smoking as a result oftaxesc. Demand is elastic, and smokers are mostly old, so taxes reduce smoking but cause increasedanxiety among the elderlyd. Demand is elastic, and smokers are mostly young, so they quit smoking but are then morelikely to experiment with illegal drugs

Externality is the term refers the benefit enjoyed or cost suffered by the third party who did not…

Answered: Why are taxes, one traditional remedy…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Externalities can be ________ by collective (i.e.) ________ action. a. enhanced // market b. internalized // market c. internalized // government d. externalized // government
A negative externality means the quantity in the market is _____ the allocatively efficient quanitity and can be corrected by a _____. A positive externality means the quantity in the market is _____ the allocatively efficient quantity and can be corrected by a ______. Word Bank: Larger than, tax, smaller than, subsidy, smaller than, equal to, subsidy, larger than, equal to, tax.
Some economists claim that early child care generates an external benefit to society. a. What is the market equilibrium? What is the socially optimal outcome? How do they differ? b. The government is planning to provide a per-unit subsidy for child care to achieve the socially optimal outcome. How large should this subsidy be? c. How much is the total government subsidy each month to reach a socially optimal outcome?
One possible way to solve a negative externality problem is to increase interest rates place a subsidy on production. limit immigration place a tax on production
Polio is a disease caused by a contagious virus that can result in paralysis. A vaccine prevents the disease and also its contagion. The government decides to subsidize the application of this vaccine by offering it for free. a. Explain how this subsidy will impact the amount of vaccines applied compared to the free market outcome with no subsidy, i.e. where people would need to pay for their own vaccine. b. Why is this subsidy different from a subsidy the government may grant on a good that generates no externalities like food? (hint: deadweight loss is not the same).
Carbon dioxide emissions have been linked to global warming. The following table lists some possible public policies aimed at reducing the amount of carbon dioxide in the air. For each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax. Command- and- Tradable Control Permit Corrective Corrective Public Policy Policy System Subsidy Тах Trees take carbon dioxide out of the air and convert it to oxygen, so the government funds a tree-planting initiative by offering $400 to any citizen who plants a tree. The government orders every factory to adopt a new technology, which reduces carbon- dioxide emissions into the atmosphere. The government limits total carbon-dioxide emissions by all factories to 150,000 tons per year. Each individual factory is given the right to emit 180 tons of carbon dioxide, and factories may buy and sell these rights in a marketplace. The government charges factories $400 for…
What is a market-failure rationale for the government investing in education and training programs? a. Education likelyresults in a negative externality in production, so government investment corrects for the under-provision by private, unregulated markets. b. Education likely results in a positive externality in consumption, so government investment corrects for the under-provision by private, unregulated markets. c. Education likely results in a positive externality in production, so government investment corrects for the over-provision by private, unregulated markets. d. Education likely results in a negative externality in consumption, so government investment corrects for the over-provision by private, unregulated markets.
When considering the possibility of legalizing the recreational use of cannabis, had the state governments of California and Maine already anticipated the price decline for cannabis after legalization? If yes, should the state governments of California and Maine choose the tax-per-price scheme or the tax-per-weight scheme?
Suppose the hot sauce firm cannot reduce the externality without reducing costs. What is a possible next step the government could take to reduce it? Select all that apply. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Tax the firm for each bottle of hot sauce produced. a b C d e Create a limit on the maximum number of bottles the firm can make. Subsidizing each bottle of hot sauce made. Not allowing consumers to buy hot sauce. Forcing the firm to install equipment to reduce the amount of pollution generated. Answered Incorrect 1 attempt left Resubmit
John loves playing country music at high volume. Mike loves opera but hates country music. Unfortunately, they are next-door neighbors in an apartment building with paper-thin walls. a. What is the negative externality in this situation? b. What command-and-control policy might the landlord impose? c. Could a command-and-control policy cause an inefficient outcome?d. Suppose the landlord lets the tenants do whatever they want. Using the Coase theorem, how might John and Mike reach an efficient outcome on their own?
Explain why economists might say that the market for higher education demonstrates externalities and market fairlure.
Governments pursue various policies to remedy the inefficiencies caused by externalities. List and describe the various policies the government may use?

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