Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 15CQ
To determine
Meaning of legal ability to exchange.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Q11
Multiple answers may be correct.
Current research on kidney transplants (see https://www.organdonor.gov/learn/organ-donation-statistics) shows that 17 people a day die while waiting for an organ. This is because:
Of the negative externalities that prevent the government from legalizing the buying and selling of organs.
Because demand is greater than supply, reflecting the fact that people should be more willing to donate their organs.
Because the rationing role of prices is not legally allowed to work in this instance.
Because organ prices are so high, most poorer people cannot afford one.
A and D only.
Chapter 2 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
Knowledge Booster
Similar questions
- Suppose you are planning to sell your house. You value your house at $150,000. If you do not hire a realtor, you will be able to sell your house to a buyer whose reservation price is $180,000. If you hire a realtor, you will be able to sell your house to a buyer whose reservation price is $200,000. Assume that the realtor's opportunity cost of negotiating the sale is $10,000. In this case, does using a realtor to sell your house increase total economic surplus? Multiple Choice No, because you value the house at $150,000 no matter who buys it. No, because your house only generated economic surplus when was first built. It depends on the sales price of the house, which isn't given in the question. Yes, using a realtor increases total economic surplus by $10,000.arrow_forwardExternalities Mark owns a butchery. His marginal cost of selling meat is MC = 0.35Q, where Q is the pounds of meat he sells. Mark is in a competitive market and can sell all the meat he wishes for $7 per pound. However, the smell from the butchery bothers the customers of George, the owner of the coffee shop next door. Assume that every pound of meat costs George $1.4 worth of lost business. If Mark focuses on maximizing his profit, how much would he sell? At the profit-maximizing quantity from part a, does selling the last pound of meat benefit the society. Calculate the social marginal cost and compare it to the marginal benefit. Note that here “society” refers to Mark and George. What is the socially optimal quantity of meat sold?arrow_forwardYou are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $40, you typically leave a 20% tip, and an Uber will cost you $5 to get there. You value the restaurant meal at $20. You enjoy your friend’s company and are willing to pay $30 just to spend an evening with her. If you did not go out to the restaurant, you would eat at home using groceries that cost you $8. How much are the benefits and costs associated with going out to dinner with your friend? Should you go out to dinner with your friend?arrow_forward
- The Tucker family has health insurance coverage that pays 80 percent of out-of-hospital expenses after a deductible of $1,000 per person. If one family member has doctor and prescription medication expenses of $2,200, what amount would the insurance company pay?arrow_forwardA recent trend in health insurance is the Health Savings Account (HSA). The idea behind Health Savings Accounts is that rather than providing employees with health insurance that makes visiting doctors cost little more than a simple $10 or $20 copay the employer gives the employee money to use to spend on health care, but the employee bares the entire cost of seeing the doctor. What money given for health care not spent by the employee can be withdrawn by the employee as if it was additional income. It is believed that Health Savings Accounts will reduce the total amount of money spent on seeing doctors. Using Supply and Demand analysis, explain why there is the expectation that HSA’s will reduce spending on doctors.arrow_forwardSuppose you observe a person's answer to two decision problems. Problem 1: You are offered $40 today. What is the minimum amount x you demand one month from today in order to be willing to give up the $40 now? Answer: x = 52. Problem 2: Your are offered $40 today. What is the minimum amount x you demand one year from today in order to be willing to give up the $40 now? Answer: $60. 1. Demonstrate that the rational model of time preferences is violated for this choice pattern. 2. Derive this individual's B and d for the hyperbolic time discounting model. 3. Suppose the utility you get from eating ice cream now is 10 utils. But you pay a cost of -4 utils per hour for the next 4 hours, because it gives you indigestion and makes you feel lethargic. If your hourly B and d for this problem are B = .6 and d = .9, ... 1. What is the total discounted utility of eating ice cream now? 2. What is your total discounted utility now of planning to eat ice cream after lunch tomorrow? 3. Do you eat ice…arrow_forward
- The hypothetical city of Hurstville is trying to decide how many city beautification projects should be approved each year. These projects involve planting gardens, commissioning murals, and building fountains. The city has two types of citizens.Type B citizens appreciate beauty more than type A citizens. There is an equal number of each type of citizen. The accompanying graph depicts each type of citizen's marginal benefit for city beautification projects. The average cost of each project is $400. Use the information in the graph to answer the questions. Use the interactive points to draw the marginal social benefits (MSB) curve. What is the optimal quantity of city beautification projects? Marginal benefit / Marginal cost ($) 1,000 900 800 600 500 400 300 200 2 Incorrect projects Incorrect City beautification is a public good because: it is nonrival in consumption and nonexcludable. 700 MSB 100 MB 0 MB M B A 0 1 2 3 4 5 Quantity of projects MSC 6 7 8 9 10arrow_forwardDo you agree that human beings, having the ability to direct their own behavior by rational decision and choice, can only be used in a way that respects this capacity? That is to say, is any exchange between two people in the absence of direct physical compulsion by one party against the other (or threat thereof) necessarily free? Explain Do you believe that people deserve all they are able, and only what they are able, to get through free exchange? Explain.arrow_forwardConsider the market for used cars. Suppose that there are "good" used cars and "lemons" (or cars that are likely to fall apart quickly). Suppose that owners of "good" used cars would be willing to sell for $15,000 and owners of "lemons" will sell their car for $7,000. Furthermore, assume buyers are willing to pay $17,000 for a "good" car and $5,000 for a lemon. Assume. that sellers know if their car is good or a lemon, but buyers cannot differentiate between good cars and lemons. Due to recent flooding events, buyers expect that approximately 35% of the cars on the market are lemons. Given this information, the maximum price that a buyer is willing to pay for a given used car is (hint: think about the expected value). This results in $11,500; both lemons and good cars being sold in the market. $17,000; only lemons being sold in the market. $17,000; both lemons and good cars being sold in the market. $11,500; only lemons being sold in the market.arrow_forward
- A market economy seems to be able to satisfy customers who have different tastes in cars. Whether you want a big car, small car, red car or blue car, as long as you are willing to pay for it, you can find the car you desire. But with protective services (police), the market doesn’t seem to work as well. If you want lots of police attention, or little police protection, whether you want them to carry guns or not, whether you want them to prevent drug sales or not, none of us seem to be able to get the exact protection services that we are willing to pay for. Using economic reasoning, can you explain why the market can provide for many different tastes in cars, but not for many different tastes in protective servicesarrow_forwarda) Define negative reciprocity, and b) explain why this is the way that our current market-based system works (“rational” actions). c) Explain how negative reciprocity can only exist when there is a total lack of social relationships, cultural values, morals, etc.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
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning