1164 Words5 Pages

SUBMISSION QUESTION 7
EXTERNALITIES AND COASE THEOREM
(a) Explain what is meant by “externalities”? (b) Consider an industry whose production process emit a gaseous pollutant into the atmosphere. Use the simple supply and demand model to demonstrate that, in the absence of any regulation, this industry’s production will result in allocative inefficiency in the use of society’s resources. Externalities is cost or benefit from production or consumption of commodity that flow to external parties but not taken into account by market (Bajada, 2012). The impact of externalities is the distortion in allocation of resources. Externalities will cause individual to pursuit based on their self-interest. Hence, it will cause*…show more content…*

The market equilibrium that reflect social cost should be at the price that higher than Pp and the quantity is lower than Qp. | Point (c) and (d) below will explain more about the correction should be taken to overcome externalities cost. (2) Externalities Benefit Externalities benefit is production or consumption of commodities that confer benefit, for which payment or compensation is not required, on third parties or community at large (Bajada, 2012). When externalities benefits occur, the market demand curve reflects only the marginal private benefit, this will understate the marginal social benefits available to the society thus the commodity become undervalued and undersupplied (Bajada, 2012) The example of externalities benefit is education. Higher education not only benefit for individual related to higher income, but also benefit for community such as more educated community and tolerant citizen. Source: Wikipedia.com | The curve shows that the market equilibrium at price Pp and Quantity Qp. Nevertheless, the market did not include the social benefit of education for the communities. Hence, the market price is underpriced. Furthermore, it also causes under-allocation of education by producers. | There are several corrections by government to make the market reflect the social benefit, which are: (1) Subsidized the supply, so that the supplier

The market equilibrium that reflect social cost should be at the price that higher than Pp and the quantity is lower than Qp. | Point (c) and (d) below will explain more about the correction should be taken to overcome externalities cost. (2) Externalities Benefit Externalities benefit is production or consumption of commodities that confer benefit, for which payment or compensation is not required, on third parties or community at large (Bajada, 2012). When externalities benefits occur, the market demand curve reflects only the marginal private benefit, this will understate the marginal social benefits available to the society thus the commodity become undervalued and undersupplied (Bajada, 2012) The example of externalities benefit is education. Higher education not only benefit for individual related to higher income, but also benefit for community such as more educated community and tolerant citizen. Source: Wikipedia.com | The curve shows that the market equilibrium at price Pp and Quantity Qp. Nevertheless, the market did not include the social benefit of education for the communities. Hence, the market price is underpriced. Furthermore, it also causes under-allocation of education by producers. | There are several corrections by government to make the market reflect the social benefit, which are: (1) Subsidized the supply, so that the supplier

Related

## Essay on A Critique of Berger's Uncertainty Reduction Theory

901 Words | 4 Pagesunique. In both areas, an individual tries to go from uncertainty to a more comfortable place. The Prediction One thing that Berger is very clear about in his theory is the "matter-of-factness" of his theorems. Berger makes no attempt to be humble with his postulations. All the theorems take the form of "If..., then..." statements. This "no holds barred" approach to prediction seems to be the weakness of Berger's Uncertainty Reduction Theory. It seems that probability and/or tendency don't

## How do the Poets Explore the Theme of Death in Educating for Leisure, Mother in a Refugee Camp, Do not go Gentle into that Good Night, Remember, T...

822 Words | 4 PagesLanguage plays a crucial role in helping a poet get his point across and this can be seen used be all the poems to help them explore the theme of death with the reader. This includes the formal, brutal and emotive language that Chinua Achebe uses in “mother in a refugee camp.” This can be seen when Achebe says, “The air was heavy with odor of diarrhea, of unwashed children with washed out ribs” this is very brutal and the is no holding back with the use of a euphemism or a simile as seen in the other

## Knowledge Framework- Mathematics

630 Words | 3 PagesKnowledge Framework- Mathematics Scope and Application Mathematics is the application of shared knowledge to help solve problems. It is about quantity, shape, space and change. Today, mathematics is integrated and closely tied into numerous professions. Accountants use math to keep track of a company’s financial movements, programmers must have a firm grasp on fundamental mathematics and algorithms, engineers use math to design, develop and manufacture, and meteorologists use math to forecast weather;

## My Favorite Subject

711 Words | 3 PagesRemember being taught something new in a mathematics class and thinking to yourself, “when am I ever going to use this in life?” Sure, not every mathematical theory taught in class will be used in your career, but from my experience, many of the skills learned in mathematics are frequently utilized each day. While mathematics may not be everyone’s favorite subject, I found it to be not only the subject I use the most outside of school, but the one that I enjoy the most, which is why mathematics is

## Reflection Paper On Number Theory

715 Words | 3 Pagesworking away at problems but carefully reading through my favorite proofs in the text and pondering what the conclusions made in the proof signified in my understanding of how the theorem worked. A good example of this is my experience studying the proof of the fundamental theorem of arithmetic. The proof of this theorem is wonderfully simple and meaningful; two prime factorizations of an integer, n, are generated and the two factorizations are shown to be the same using Euclid’s lemma. While this

## Analysis of Baxter's Gryphon Essays

498 Words | 2 PagesOther than that, there are still many theories rather than laws in science that challenge students to disprove them. Math is rather the same in that there are a lot of theories named after old mathematicians. There is the Pythagorean Theorem, Fundamental Theorems,

## Ptolemy's Theorem Essay

1222 Words | 5 Pagesproperty which is why I choose to delve further into the Ptolemy’s Theorem. The Ptolemy’s Theorem provides a relationship between the four side lengths and the two diagonals of a cyclic quadrilateral, an inscribed figure whose vertices lie on a common circle. The theorem states that when the product of the two pairs of opposites sides are added together, it is equals to that of the product of the diagonals

## Analysis Of Proof The Proof

1210 Words | 5 PagesIn the play Proof, David Auburn, suggests that Catherine the main protagonist is into mathematics. Catherine’s father Robert was a mathematical genius as he was a professor at the University of Chicago. Catherine took care of him for five years while he was sick, which caused her to stop going to College. Robert died due to a mental illness. Catherine wrote a proof that not even Hal a Ph.D. graduate could have discovered. As she inherited her father’s mathematical genius, she is afraid that she might

## Comparing and Contrasting Euclidean, Spherical, and Hyperbolic Geometries

1821 Words | 8 PagesIn my homework I used two different proofs to prove the Vertical Angle Theorem on a Euclidean plane and a sphere. The first idea I used was looking at the Vertical Angle Theorem using angle as measure. The second idea I used was looking at the Vertical Angle Theorem using angle as rotation. I have provided my homework so that one can see my reasoning behind both of these proofs. I found that they worked on a Euclidean

## Essay about The Genius that Was Pythagoras

573 Words | 3 PagesMozart's talent came naturally where as Einstein had mentors help him along the way. Pythagoras was known as the first pure mathematician. So was Pythagoras considered a genius? Pythagoras was most well-known for what we know today as the Pythagorean Theorem and also that the sum of all the angles in a triangle is equal to two right angles. This is my reasoning on why I think Pythagoras was not considered what we think a genius is. Pythagoras was born around 569 BC on the island of Samos, Greece. When

### Essay on A Critique of Berger's Uncertainty Reduction Theory

901 Words | 4 Pages### How do the Poets Explore the Theme of Death in Educating for Leisure, Mother in a Refugee Camp, Do not go Gentle into that Good Night, Remember, T...

822 Words | 4 Pages### Knowledge Framework- Mathematics

630 Words | 3 Pages### My Favorite Subject

711 Words | 3 Pages### Reflection Paper On Number Theory

715 Words | 3 Pages### Analysis of Baxter's Gryphon Essays

498 Words | 2 Pages### Ptolemy's Theorem Essay

1222 Words | 5 Pages### Analysis Of Proof The Proof

1210 Words | 5 Pages### Comparing and Contrasting Euclidean, Spherical, and Hyperbolic Geometries

1821 Words | 8 Pages### Essay about The Genius that Was Pythagoras

573 Words | 3 Pages