Classification of positive and negative externality.

Question

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Answer 1

Question

Chapter 10, Problem 1CQQ

To determine

Classification of positive and negative externality.

Expert Solution & Answer

Answer to Problem 1CQQ

Option “c” is correct.

Explanation of Solution

Sub part (c):

The statement “Hillary’s newly cut lawn makes her neighborhood more attractive” is related to positive externality. Hillary’s cut lawn making her neighborhood more attractive is beneficial for the neighborhoods. Thus, option “c” is correct.

Sub part (a):

The statement “Dev mows Hillary's lawn and is paid $100 for performing the service” is related to negative externality. Dev cutting Hillary’s lawn and being paid $100 for performing the services creates a cost. Thus, option “a” is incorrect.

Sub part (b):

Since the discharge of smoke makes the neighbor uncomfortable, it is negative externality. Thus, option “b” is incorrect.

Sub part (d):

The statement “Hillary’s neighbors pay her if she promises to get her lawn cut on a regular basis” is related to negative externality. Thus, option “d” is incorrect.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to the third party other than the immediate market participants. The negative spillover to the third party is negative externality and positive spillover to the third party is positive externality.

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Exercise 6 Imagine that you head production of a multinational food processing company. The ongoing uncer- tainty about costs means that you are unsure of the future cost of one of your inputs, x2. Your firm's production function is y = f(x1, x2) = x²x²² The output price p is 1000, x1 = 27, and wx₁ = 60. 1. Suppose the current input price is Wx2 = 50. Solve for the optimal choice of x2. 2. Now suppose that the probability the input price remains 50 is 0.65 and the probability that Wx2 60 is 0.35. Solve for the optimal choice of x2. Round down to the nearest integer. = 3. Finally, suppose the costs do actually rise, i.e., Wx2 = 60. Calculate the difference in profit from the uncertainty in (2) vs. the certainty in (1).

Answer 2

Question

Chapter 10, Problem 1CQQ

To determine

Classification of positive and negative externality.

Expert Solution & Answer

Answer to Problem 1CQQ

Option “c” is correct.

Explanation of Solution

Sub part (c):

The statement “Hillary’s newly cut lawn makes her neighborhood more attractive” is related to positive externality. Hillary’s cut lawn making her neighborhood more attractive is beneficial for the neighborhoods. Thus, option “c” is correct.

Sub part (a):

The statement “Dev mows Hillary's lawn and is paid $100 for performing the service” is related to negative externality. Dev cutting Hillary’s lawn and being paid $100 for performing the services creates a cost. Thus, option “a” is incorrect.

Sub part (b):

Since the discharge of smoke makes the neighbor uncomfortable, it is negative externality. Thus, option “b” is incorrect.

Sub part (d):

The statement “Hillary’s neighbors pay her if she promises to get her lawn cut on a regular basis” is related to negative externality. Thus, option “d” is incorrect.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to the third party other than the immediate market participants. The negative spillover to the third party is negative externality and positive spillover to the third party is positive externality.

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Answer 3

Question

Chapter 10, Problem 1CQQ

To determine

Classification of positive and negative externality.

Expert Solution & Answer

Answer to Problem 1CQQ

Option “c” is correct.

Explanation of Solution

Sub part (c):

The statement “Hillary’s newly cut lawn makes her neighborhood more attractive” is related to positive externality. Hillary’s cut lawn making her neighborhood more attractive is beneficial for the neighborhoods. Thus, option “c” is correct.

Sub part (a):

The statement “Dev mows Hillary's lawn and is paid $100 for performing the service” is related to negative externality. Dev cutting Hillary’s lawn and being paid $100 for performing the services creates a cost. Thus, option “a” is incorrect.

Sub part (b):

Since the discharge of smoke makes the neighbor uncomfortable, it is negative externality. Thus, option “b” is incorrect.

Sub part (d):

The statement “Hillary’s neighbors pay her if she promises to get her lawn cut on a regular basis” is related to negative externality. Thus, option “d” is incorrect.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to the third party other than the immediate market participants. The negative spillover to the third party is negative externality and positive spillover to the third party is positive externality.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 1CQQ

To determine

Classification of positive and negative externality.

Expert Solution & Answer

Answer to Problem 1CQQ

Option “c” is correct.

Explanation of Solution

Sub part (c):

The statement “Hillary’s newly cut lawn makes her neighborhood more attractive” is related to positive externality. Hillary’s cut lawn making her neighborhood more attractive is beneficial for the neighborhoods. Thus, option “c” is correct.

Sub part (a):

The statement “Dev mows Hillary's lawn and is paid $100 for performing the service” is related to negative externality. Dev cutting Hillary’s lawn and being paid $100 for performing the services creates a cost. Thus, option “a” is incorrect.

Sub part (b):

Since the discharge of smoke makes the neighbor uncomfortable, it is negative externality. Thus, option “b” is incorrect.

Sub part (d):

The statement “Hillary’s neighbors pay her if she promises to get her lawn cut on a regular basis” is related to negative externality. Thus, option “d” is incorrect.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to the third party other than the immediate market participants. The negative spillover to the third party is negative externality and positive spillover to the third party is positive externality.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1CQQ

To determine

Classification of positive and negative externality.

Expert Solution & Answer

Answer to Problem 1CQQ

Option “c” is correct.

Explanation of Solution

Sub part (c):

The statement “Hillary’s newly cut lawn makes her neighborhood more attractive” is related to positive externality. Hillary’s cut lawn making her neighborhood more attractive is beneficial for the neighborhoods. Thus, option “c” is correct.

Sub part (a):

The statement “Dev mows Hillary's lawn and is paid $100 for performing the service” is related to negative externality. Dev cutting Hillary’s lawn and being paid $100 for performing the services creates a cost. Thus, option “a” is incorrect.

Sub part (b):

Since the discharge of smoke makes the neighbor uncomfortable, it is negative externality. Thus, option “b” is incorrect.

Sub part (d):

The statement “Hillary’s neighbors pay her if she promises to get her lawn cut on a regular basis” is related to negative externality. Thus, option “d” is incorrect.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to the third party other than the immediate market participants. The negative spillover to the third party is negative externality and positive spillover to the third party is positive externality.

Answer 6

Chapter 10, Problem 1CQQ

To determine

Classification of positive and negative externality.

Expert Solution & Answer

Answer to Problem 1CQQ

Option “c” is correct.

Explanation of Solution

Sub part (c):

The statement “Hillary’s newly cut lawn makes her neighborhood more attractive” is related to positive externality. Hillary’s cut lawn making her neighborhood more attractive is beneficial for the neighborhoods. Thus, option “c” is correct.

Sub part (a):

The statement “Dev mows Hillary's lawn and is paid $100 for performing the service” is related to negative externality. Dev cutting Hillary’s lawn and being paid $100 for performing the services creates a cost. Thus, option “a” is incorrect.

Sub part (b):

Since the discharge of smoke makes the neighbor uncomfortable, it is negative externality. Thus, option “b” is incorrect.

Sub part (d):

The statement “Hillary’s neighbors pay her if she promises to get her lawn cut on a regular basis” is related to negative externality. Thus, option “d” is incorrect.

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to the third party other than the immediate market participants. The negative spillover to the third party is negative externality and positive spillover to the third party is positive externality.

Answer 7

Chapter 10, Problem 1CQQ

To determine

Classification of positive and negative externality.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option “c” is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Sub part (c):

The statement “Hillary’s newly cut lawn makes her neighborhood more attractive” is related to positive externality. Hillary’s cut lawn making her neighborhood more attractive is beneficial for the neighborhoods. Thus, option “c” is correct.

Sub part (a):

The statement “Dev mows Hillary's lawn and is paid $100 for performing the service” is related to negative externality. Dev cutting Hillary’s lawn and being paid $100 for performing the services creates a cost. Thus, option “a” is incorrect.

Sub part (b):

Since the discharge of smoke makes the neighbor uncomfortable, it is negative externality. Thus, option “b” is incorrect.

Sub part (d):

The statement “Hillary’s neighbors pay her if she promises to get her lawn cut on a regular basis” is related to negative externality. Thus, option “d” is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Externality: Externality refers to the spillover of benefits or costs to the third party other than the immediate market participants. The negative spillover to the third party is negative externality and positive spillover to the third party is positive externality.

Answer 13

Ch. 10.1 - Prob. 1QQ Ch. 10.2 - Prob. 2QQ Ch. 10.3 - Prob. 3QQ Ch. 10 - Prob. 1CQQ Ch. 10 - Prob. 2CQQ Ch. 10 - Prob. 3CQQ Ch. 10 - Prob. 4CQQ Ch. 10 - Prob. 5CQQ Ch. 10 - Prob. 6CQQ Ch. 10 - Prob. 1QR

Classification of positive and negative externality.

Classification of positive and negative externality.

Answer to Problem 1CQQ

Explanation of Solution

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Chapter 10 Solutions