Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 12, Problem 3.1P
(a)
To determine
Validate the statement on sources of market failure.
(b)
To determine
Validate the statement on sources of market failure.
(c)
To determine
Validate the statement on sources of market failure.
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Part A: Several years ago, hurricane Gilbert destroyed thousands of acres of banana in Jamaica. Farmers whose crops were destroyed by the hurricane were much worse off, but farmers whose crops were not destroyed benefitted from the hurricane. Why did this occur? what information would you need about the market for bananas in order to assess whether farmers as a group were hurt or helped by the floods?
Part B: Explain why the following might be true: A drought in the Caribbean raises the total revenue that producers receive from the sale of coffee, but a drought only in Grenada reduces the total revenue that Grenadian producers receive.
Economists have stated that an economy has plunged to a market failure with an uptick in natural gas prices and production which has led to underperformance in other areas of the economy.
1. Identify the type of market failure being discussed in the article and discuss why
market failure occurs in this scenario.
2. Suggest a relevant government policy that would yield an efficient outcome and
carefully explain the process through which the implementation of the
government policy will lead to the optimal outcome.
3. How will the imposition of the chosen government policy impact consumer?
surplus, producer surplus and total surplus in this scenario?
Several years ago, hurricane Gilbert destroyed thousands of acres of banana in Jamaica. Farmers whose crops were destroyed by the hurricane were much worse off, but farmers whose crops were not destroyed benefited from the hurricane. Why did this occur? What information would you need about the market for bananas in order to assess whether farmers as a group were hurt or helped by the floods?Explain that in detail using graphs .
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Principles of Economics (12th Edition)
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