(a) Identify the type of market failure, explain why it occurs and provide a solution (i) An auto repair shop convinces you that you need a $20,000 valve job when all you need is an oil change. (ii) Everyone in the neighbourhood would benefit if an empty lot were turned into a park but no entrepreneur will come forward to finance the transformation (iii) A barking dog in the backyard
(a) Identify the type of market failure, explain why it occurs and provide a solution (i) An auto repair shop convinces you that you need a $20,000 valve job when all you need is an oil change. (ii) Everyone in the neighbourhood would benefit if an empty lot were turned into a park but no entrepreneur will come forward to finance the transformation (iii) A barking dog in the backyard
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter10: Externalities
Section: Chapter Questions
Problem 3PA
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(a) Identify the type of market failure, explain why it occurs and provide a solution
(i) An auto repair shop convinces you that you need a $20,000 valve job when all you need is an oil change.
(ii) Everyone in the neighbourhood would benefit if an empty lot were turned into a park but no entrepreneur will come forward to finance the transformation
(iii) A barking dog in the backyard
(b) Define the tragedy of the commons in your own words.
(c) Why are fish in the ocean an example of a resource that suffers from the tragedy of the commons but cattle grazing in a farmer’s pasture does not suffer from the tragedy of the commons?
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