The various categories of legislation based on the distribution of costs and benefits with the help of example. Concept Introduction : Different categories of legislation are based on the following categories of distribution: Widespread benefits and widespread costs Concentrated benefits and widespread costs Widespread benefits and concentrated costs Concentrated costs and concentrated benefits

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Think about the goods and services provided by your local government.Using the classification in Figure 1, explain which category each of the following goods falls into: a. police protection b. snow plowing c. education d. rural roads. e. city streets 2. Why do you think the government provides items that are not public goods?

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Chapter 16, Problem 2.3P

To determine

The various categories of legislation based on the distribution of costs and benefits with the help of example.

Concept Introduction:

Different categories of legislation are based on the following categories of distribution:

Widespread benefits and widespread costs

Concentrated benefits and widespread costs

Widespread benefits and concentrated costs

Concentrated costs and concentrated benefits

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Think about the goods and services provided by your local government.Using the classification in Figure 1, explain which category each of the following goods falls into: a. police protection b. snow plowing c. education d. rural roads. e. city streets 2. Why do you think the government provides items that are not public goods?

Name: Name: Name: $/unit 25 1 Fertilizing Fish When farmers fertilize their fields, the nitrogen from the fertilizer can get washed into streams which then feed into larger rivers. This "runoff" can cause damage to ecosystems and reduce the number of fish that can be caught by fishermen farther downstream. 20 Who are the producers of fertilizer? Who are the consumers of fertilizer? Who are the third parties affected by the externality? The graph below shows the market for fertilizer where P=2+0.5Q, and P = 20 - Qd. The marginal external cost of fertilizer = Q. This means, for example, if 3 units of fertilizer are used then the last unit of fertilizer causes fishermen to suffer a $3 loss...however, they are worse off by $1 from the first unit and $2 from the second unit as well for a total welfare loss of $6. What is the equation for your new curve? Label the curves on the graph, indicating if they're S or D, private or social. Draw & label a new curve demonstrating the externality. 15…

Question 3 Some reasons why resources could be allocated inefficiently by the market are negative externalities and positive externalities. (a) Explain, using graphs, what the problem is in each case, and explain possible solutions to each problem. (b) All of these problems might be described as arising due to poorly defined property rights. Explain the relationship of property rights to these instances where the market fails to allocate resources efficiently. (c) Explain how a corrective tax can eliminate the inefficiency caused by a negative externality. Use a graph to assist your explanation (d) Why does the optimal tax promote the efficient use of resources?