19. Why would club goods not have a free rider problem? They are not homogenous goods. One person's use does not preclude others from enjoying the good. Non-payers can be excluded from using the goods. They also have external benefits. а. b. C. d.
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- 4) The fact that wants cannot be fully satisfied with available resources reflects the definition of A) the what tradeoff. B) scarcity. C) the big tradeoff. D) for whom to produce. 5) Suppose the Gallo sisters, Ernestine and Julia, were not on speaking terms with one another. They each raised grapes and peanuts. Ernestine could increase her output of grapes by one bushel if she reduced her output of peanuts by two bushels and Julia could increase her output of grapes by one bushel if she reduced her output of peanuts by four bushels. According to this information, Ernestine has: A) a comparative advantage in the production of grapes. B) a comparative advantage in the production of both goods. C) a comparative advantage in the production of peanuts. D) an absolute advantage in the production of peanuts 6) Factors of production are grouped into four categories: A) land, labor, capital, entrepreneurship B) land, labor, capital, money C) land, capital, money, entrepreneurship D) labor,…“How to allocate limited resources to their best use is the very first and fundamental principle that you guys learn in a first course in both economics and finance.” Explain how the concepts and techniques covered in the various topics in this course can help address the issue. [Hint: Think about how NPV, as an investment decision rule, addresses the efficient allocation of limited resources problem. Specifically, why an investment project being “profit-making” may still be value- destroying and result in misallocation of resources?]6. Common resources and the tragedy of the commons Brian, Edison, and Kevin are loggers who live next to a forest that is open to logging; in other words, anyone is free to use the forest for logging. Assume that these men are the only three loggers who log in this forest and that the forest is large enough for all three loggers to log intensively at the same time. Each year, the loggers choose independently how many acres of trees to cut down; specifically, they choose whether to log intensively (that is, to clear-cut a section of the forest, which hurts the sustainability of the forest if enough people do it) or to log nonintensively (which does not hurt the sustainability of the forest). None of them has the ability to control how much the others log, and each logger cares only about his own profitability and not about the state of the forest. Assume that as long as no more than one logger logs intensively, there are enough trees to regrow the forest. However, if two or more log…
- 1.Transport economics is an applied area of economics that is concerned with the efficient use of society’s scare resources for the movement of people and goods True/False 2. Holding everything else constant, an improvement in technology affecting the manufacture of a particular good will……. a. Shift the supply curve to the left b. Shift both the demand curve and the supply curve to the left c. Shift the supply curve to the right d. Shift both the demand curve and the supply curve to the right 3. In economics, an externality is a cost that is imposed on a third party who did not agree to incur that cost or benefit. True/FalseQuestion 2 Your marginal benefits from eating candy bars is shown in the table below # Hotdogs Marginal benefits (MB) 0 0 1 7 2 4 3 2 4 1 Which core principles are represented in this scenario (if any)? If the price of a candy bar is $3 how many should you buy? Explanation. Question 2b Too many cooks spoil the broth. Which core principles are represented in this scenario (if any). explain Question 2c Due to heavy rains, the price of ground produces increases. Which core principles are represented in this scenario (if any). Explaina-Negative Externalities----What Kind of Effect Does It Create MSC and MPC b-What kind of an effect does it have in the market equilibrium that gets established? c-How does the q * compare with the q that is a social optimum. Which social optimum ensuring condition is violated as a result of externalities(negative or positive) d-What about a monopoly? How does market power change the relationship between MC and the aggregate benefit curve? What do we need to assume about the firms to make sure that this condition does not hold? How is that related to the elasticity calculation we made for the market demand/individual demand curve? e- How does the q* under monopoly compare with the q that would give us the social optimum. How is it related to the incentive structure for a monopoly?
- Instructions: Once you’ve read Chapter 1: Limits, Alternatives, and Choices and Chapter 1 Appendix: Graphs and Their Meaning then read the scenario and find the solutions to the problems. Scenario: Suppose that you are on a desert island and possess exactly 20 coconuts. Your neighbor, Friday, is a fisherman, and he is willing to trade 2 fish for every 1 coconut that you are willing to give him. Another neighbor, Kwame, is also a fisherman, and he is willing to trade 3 fish for every 1 coconut. Problems: On a single figure, draw budget lines for trading with Friday and for trading with Kwame. (Put coconuts on the vertical axis.) Note: The budget line from trading with Friday (or Kwame) features a set of attainable combinations of coconuts and fish. What is the slope of the budget line from trading with Friday? What is the slope of the budget line from trading with Kwame?4. Answer both questions 2. Suppose a particular stretch of river can be used to build a hydropower dam that generates Q Kilowatt-hours (MWh) of electricity. The electricity price is 1.44 per Kilowatt-hour. The opportunity cost of producing power is C = $0.0007 x Q2 per hour. The opportunity cost of the dam is due to the foregone net benefit that would have resulted from recreation activity related to the river. What is the net benefit of the dam if the dam has optimal size? 3. Assume that the society should decide on how to allocate 24 units of depletable resource between two periods (period 1 and period 2). Benefit and cost of extracting qi units of depletable resource in period i = 1,2 are Bi = 127qi – 2qi2 and Ci = 17qi respectively. How much should the society extract in period 1 if the discount rate is 2%?1. The U.S. economy and technology are two primary external environmental elements that drive a hypercompetitive environment. True False 2. The five forces model indicates that firms can produce above average returns for all of the following except: Group of answer choices a. all of the above are indicators of above-average returns b. by producing standardized goods or services at a cost below those of competitors c. when firms can study the external environment to identify an attractive industry d. by producing standardized goods or services which customers are willing to pay premium prices 3. Firms can increase competitive rivalry and build barriers to entry by forming joint ventures. Group of answer choices a. True b. False 4. Apple’s research and development function has the ability to produce innovative new products that are perceived as valuable in the marketplace. This is an example of Apple’s Group of answer choices a. A tangible resource b. core competency c. An intangible…
- suggest a potential solution to that student's problem. How would you internalize their externality or dissuade the free riding? A time I have experienced negative externality would be air pollution. The wild-fires in Canada have caused a tremendous amount of air pollution (smoke), while these fires are 'controlled' they have gotten out of hand and aren't benefiting the public. The smoke has created an unhealthy air level and can in some cases cause death, going outside I can clearly see the smoke that has traveled and I can smell it. Some of my friends have to stay inside because of health conditions, although it was meant to prevent a larger fire it has created a larger problem as it has gotten out control. This is problematic because there's almost no way of clearing up the smoke and people who will suffer from its outcome will not receive any compensation. It will also effect wild-life and plants, it will be hard to reverse the effects of this fire and the harm it has done. With…Explain why “tragedies” occur when the goods involved are common goods/resources. Explain how the Coase theorem may or may not resolve this problem7. A common misconception is that trade takes place between two people because: A. they are willing to pay a higher price for a good than it is worth to the current owner. B. they have too much of some goods. C. they have become convinced that it is ethical to do so. D. All the above. E. B and C only.
