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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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

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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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