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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Question
Chapter 12, Problem 3.4P
(a)
To determine
Identify the public good.
(b)
To determine
Identify the public good.
(c)
To determine
Identify the public good.
(d)
To determine
Identify the public good.
(e)
To determine
Identify the public good.
(f)
To determine
Identify the public good.
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Use the graph below for the next 2 questions
Price
social
$18
Pinternal
$14
$12
Dimternal
50
70
Quantity
#4. The figure best illustrates what type of market?
a. The good produced creates a positive externality.
b. The good produced creates a negative externality.
c. The good produced is a club good.
d. The good produced is a public good.
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.
Tesla's new electric cars are making noise in the media as they are creating in increase in demand for green efficient transportation. Research an article on how the social influence from companies, such as Tesla, are impacting consumer decisions. How should the government react to these changes in consumer demand; changing the laws or letting the competitive markets determine if a company's impact on the supply and ultimately demand for certain products should be allowed.
Chapter 12 Solutions
Principles of Economics (12th Edition)
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Similar questions
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- Externalities - Definition and examples An 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.arrow_forwardGraph the following data on social and market demand: Im pretty sure I have the graph correct but I am unsure how to find the anwsers to the questions. Price ($) 20 18 16 14 12 10 Market quantity demanded (units per month) 10 20 30 40 50 60 Social quantity demanded (units per month) 20 30 40 50 60 70 Does this product have external benefits or external costs? How large ($) is that externalityarrow_forwardCarbon tax debate heats up in Montpelier VT Vermonters are debating the pros and cons of a state carbon tax-a new tax on gasoline, heating oil, and other fossil fuels sold in the state. Backers say the tax revenue would be used to cut other taxes and increase energy efficiency. Source: Watchdog.org, December 3, 2015 Draw a graph of the market for gasoline in Vermont to show the "pro" and the "con" for a state carbon tax. The graph shows the market for gasoline in Vermont when there is no carbon tax on gasoline. Draw a point that shows the market equilibrium. Label it 1 Transport that uses gasoline creates emissions pollution, and the quantity of emissions increases as the amount of gasoline used increases. Draw the marginal social cost curve and label the curve. Draw a point at the efficient market outcome. Label it 2. Now suppose the government places a carbon tax on gasoline equal to the marginal external cost at the efficient quantity of transport. Draw an arrow at the efficient…arrow_forward
- Identify the characteristics of a public good. a. Why do public goods exist? b. What is the problem that comes about due to public goods? c. Which of the following are public goods: parks, police services, welfare payments to the poor, production of energy, space exploration? d. Briefly describe how the free rider problem can be overcome. e. Briefly explain why markets often have a difficult time producing public goods.arrow_forwardSeveral 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 .arrow_forwardCategorize each of the following five goods as a Private Good, Common Good, Club Good, or Public Good. Descriptions of each good will serve as hints. Remember, our textbook outlines only two types of goods, see the notes and lecture video for the other two types. a) An NPR (radio) signal - which is available to everyone with a radio, whether or not they contribute, the signal does not diminish no matter how many people tune in. [Select] b) A new Ford truck this can only be purchased by one person, you can not drive it off the lot without paying for it. [Select] c) A subscription to Disney+ - you can not have a subscription without paying for it, purchasing a subscription does not lower the total number of subscriptions available. [ Select] d) A fireworks show on the 4th of July - the fireworks are visible to everyone in the town, whether or not they contributed anything to the display, one person viewing the fireworks does not make them less visible for anyone else. [Select] e) A…arrow_forward
- The National Hockey League decides to put a new franchise in Hamilton which is close to existing teams in Buffalo and Toronto. Which of the following best describes the impact of this decision? Select one: a. product-variety externality, which harms consumers b. business-stealing externality, which benefits consumers c. product-variety externality, which benefits consumers d. business-stealing externality, which harms consumersarrow_forward2. Last year, nearly 200 countries agreed on a plan to limit greenhouse gas emissions, in an effort to limit climate change. One of the challenges in creating such a plan is that climate change is a global phenomenon, depending on total emissions from all countries. Which of the following best describes the benefits of a plan that reduces global warming? a. It's a common pool resource; countries will tend to contribute too much to global warming efforts b. It's a public good; countries will tend to contribute too much to global warming efforts C. It's a common pool resource; countries will tend to contribute too little to global warming efforts d. It's a public good; countries will tend to contribute too little to global warming efforts e. None of the abovearrow_forwardUse a graph and a written description to explain what happens when an oil shortage leads to reduced supplies of synthetic rubber, a resource that is used for both bicycle and motorcycle tires.arrow_forward
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