Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 10, Problem 1PA
To determine
Positive and negative externality for adopting car-protecting methods.
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What are two ways to protect your car from theft. The Club (a steering wheel lock) makes it difficult for a car thief to take your car. Lojack (a tracking system) makes it easier for the police to catch the car thief who has stolen it. Which of these types of protection conveys a negative externality on other car owners? Which conveys a positive externality? Do you think there are any policy implications of your analysis?
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Chapter 10 Solutions
Essentials of Economics (MindTap Course List)
Ch. 10.1 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.3 - Prob. 3QQCh. 10 - Prob. 1CQQCh. 10 - Prob. 2CQQCh. 10 - Prob. 3CQQCh. 10 - Prob. 4CQQCh. 10 - Prob. 5CQQCh. 10 - Prob. 6CQQCh. 10 - Prob. 1QR
Ch. 10 - Prob. 2QRCh. 10 - Prob. 3QRCh. 10 - Prob. 4QRCh. 10 - Prob. 5QRCh. 10 - Prob. 6QRCh. 10 - Prob. 1PACh. 10 - Prob. 2PACh. 10 - Greater consumption of alcohol leads to more motor...Ch. 10 - Prob. 4PACh. 10 - The many identical residents of Whoville love...Ch. 10 - Prob. 6PACh. 10 - Prob. 7PACh. 10 - Prob. 8PACh. 10 - Prob. 9PA
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- I chose option D and got this wrong. I thought that when you had a positive externality The demand curve move to the right. Wouldn’t this mean that the level of output and the price would be greater than the free market ones? can you explain how my answer is wrong? What is correct?arrow_forwardIdentify at least one positive and negative externality from running a hamburger shop. What is one example of how an externality could affect the price of your hamburger?arrow_forwardImagine that a town of 200 people is trying to decide whether to pay for mosquito control. The town has surveyed their citizens and they each say they value mosquito control at $75. Mosquito control only costs $2,500 so the town goes ahead and pays for the service. When the town asks for donations to pay for the mosquito control, they only receive $1,000. What does this result show? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The town's citizens were free riders. b The mosquito control suffered from the tragedy of commons. The mosquito control cost must have been greater than its economic benefit. d. The town's survey must have overestimated the value of mosquito control.arrow_forward
- Smoking imposes externalities on non-smokers, but non-smokers can also impose externalities on smokers. Is this statement true or false? Why or why not?arrow_forwardHow is the increase in post-secondary education (e.g. positive externality) going to effect consumer behavior in the future?arrow_forwardWhich of the following is a negative externality connected to attending college? A) The fact that completion of a college degree acts as a signaling mechanism to employers. B) The fact that other costs, such as books and materials, are incurred in addition to tuition and fees. C) The fact that your college has required that all individuals living in student housing either get or show they have already obtained vaccinations against all communicable diseases. D) The fact that the people in the next room play loud music at hours you want to sleep. E) The fact that you will get benefits from college that you don't currently anticipate.arrow_forward
- Give an example for a negative or positive externality and explain the inefficiency this negative or positive externality might cause. How should the government deal with this negative or positive externality? (regulation, taxes, subsidies, private remedies, etc.) What would be the most appropriate remedy for your example?arrow_forwardWhich of the following generate the type of externality previously described? Check all that apply. The city where you live has granted a permit to put a movie theater in your neighborhood, causing traffic jams at night and on weekends. A microbiology lab has published its breakthrough in swine flu research. Your roommate, Lucia, has bought a puppy that barks all day while you are trying to study economics. Eric has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.arrow_forwardAn externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to refiect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good. -O- Supply Demand Supply Demand QUANTITY (Unts) With this type of externality, in the absence of government intervention, the market…arrow_forward
- During the time of a pandemic and the existence of a highly contagious corona-virus, many scientists recommended wearing a mask. Let's assume that wearing a mask can limit the spread of the virus. Is wearing a mask an externality? Positive or negative? How about not wearing a mask? Explain your answers.arrow_forwardAn externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is beneficial, it is called a externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Adjust one or both of the curves to reflect the presence of the externality. If the social cost of producing the good is not equal to the private cost, then you should drag the supply curve to reflect the social costs of producing the good; similarly, if the social value of producing the good is not equal to the private value, then you should drag the demand curve to reflect the social value of consuming the good. (?) PRICE (Dollars per unit) QUANTITY (Units) Supply Demand ¦ þ Demand Supplyarrow_forwardPlease think of one example of a product that you use on a regular basis for which some of the cost of production or consumption are externalized. Please explain. What will be the long-term cost for or impact on society of this externalization? How much more would you be willing to pay for that product in order to have all costs factored into the price?arrow_forward
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