Microeconomics:
4th Edition
ISBN: 9781464143878
Author: Paul Krugman
Publisher: Worth Publishers
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Question
Chapter 16, Problem 10P
To determine
The impact of different activities on society and also individual.
Concept Introduction:
Externality in Economics:
In economics, externality is a concept which discusses the consequence of an economic activity which can have a positive or a negative impact on the third party who is completely unrelated to the activity.
Positive externality:
Externality which creates benefit to the third party is positive externality.
Negative externality:
Externality which creates harm to the third party is negative externality.
Marginal Social benefit:
The marginal social benefit is the change in total benefit to the society from the consumption of one extra unit of a good or service.
Marginal
The marginal social cost is the change in total cost incurred by the society for the consumption of one extra unit of a good or service.
Marginal individual benefit:
The marginal individual benefit is the change in total benefit to an individual from the consumption of one extra unit of a good or service.
Marginal individual cost:
The marginal individual cost is the change in total cost incurred by an individual for the consumption of one extra unit of a good or service.
Socially optimal level of output:
The level of output at which marginal social benefit is exactly equal to marginal social cost is known as socially optimal level of output. If output is at some other point, market failure exists. It is also known as the
Pigouvian tax:
Tax that is imposed in the market with negative externality. It is imposed to correct the inefficiency created by the negative externality.
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Descriptive statistics provide details about the Y variable, based on the sample for the 10-year period. Here, you use Excell or manually compute
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Section III: Empirical Findings: Descriptive Statistics and inferential statistics………………..40%
Descriptive statistics provide details about the Y variable, based on the sample for the 10-year period. Here, you use Excell or manually compute
Mean or the average income per capita. Interpret the meaning of average income per capita.
Draw the line chart showing the educational performance over the time-period of your study. Label the Vertical axis as Y performance and X axis as the explanatory variable (X1) . Do the same thing between Y and X2
Empirical/ Inferential Statistics: Here, use the sample information to perform the following:
Draw the Scatter plot and impose the trend line: showing the Y variable and explanatory variables ( X1).
Draw the scatter plot and impose the tend line: Showing Y and X2.
Does your evidence (data) support your theory? Refer to the trend line: Is the relationship positive or negative as expected?
Create graphs based on table below;
Years
Y ( per…
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