John has been in the habit of mowing Willa's lawn each week for $20. John's opportunity cost is $15, and Willa would be willing to pay $25 to have her lawn mowed. What is the maximum tax the government can impose on lawn mowing without discouraging John and Willa from continuing their mutually beneficial arrangement? Explain.

John has been in the habit of mowing Willa's lawn each week for $20. John's opportunity cost is $15, and Willa would be willing to pay $25 to have her lawn mowed. What is the maximum tax the government can impose on lawn mowing without discouraging John and Willa from continuing their mutually beneficial arrangement? Explain.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter1: What Economics Is About

Section: Chapter Questions

Problem 3WNG

See similar textbooks

Similar questions

The production possibility frontier for X and Y consists of all the efficient allocations in the Edgeworth box. Explain why this is so. Also explain why inefficient points in the box would be inside the production possibility frontier.
Consider the following two taxes: 1) a state imposes a 10 cent tax on every gallon of gasoline sold in the state to pay for road maintenance and improvements, and 2) a state imposes an additional 1% income tax on all state residents to pay for the construction of 50 new soccer fields throughout the state. Which of these two taxes is more consistent with the benefits-received principle? Why?
Chicken production generally results in terrible odours that are carried by the wind to rural communities. This is an example of a ______________, with a result of ____________ of resources in chicken production.a. Negative externality, under-allocationb. Positive externality, over-allocationc. Positive externality, over-allocationd. Negative externality, , over-allocationFor each of the alternatives, explain which one is correct and also explain which ones are false or uncertain.
No more than 100 words for the answer: Explain briefly how property law can serve society’s interest in achieving an economically efficient allocation of resources, goods, and services.
Lucia is waiting in line to receive a free t-shirt at a charity event. Because the shirts are free, there are many people in line, and a long wait time is expected. Consider the following sentence: By waiting in line for the shirt Lucia will miss an appointment to tutor an economics student, for which she would have been paid $30. Which basic concept of individual choice does this sentence best illustrate? A. Externalities are a shortcoming of the market. B. Many decisions are made on the margin. C. People usually exploit opportunities to make themselves better off. D. Opportunity costs and money costs (price) are related but are not always exactly the same.
Question 3 Person 1 can allocate her 8-hour day between the production of two goods A and B. Each hour devoted to Good B yields 2 units whereas each hour devoted to Good A produces 4 units. a) State whether 9units of Good B and 12 units of Good A are attainable, unattainable, efficient or inefficient. (State all that applies) b) Person 2, can produce3 units of Good B or 4 units of Good A per hour who has the absolute advantage in the production of Good B? c) who has the absolute advantage in the production of Good A? d) Calculate the opportunity cost for Good B for Person 2 e) Calculate the opportunity cost for Good A for person 1 f) who has the comparative advantage in the production of Good B? g) who has the comparative advantage in the production of Good A?
Weel explained answer needed no Ai The Coase Theorem states that: a) As long as property rights are well defined and no transaction costs exist, an efficient allocation will result b)As long as property rights are well defined and transaction costs are high, an efficient allocation will result. c)An efficient allocation will be equitable to all parties concerned. d)Property rights should initially be assigned to those affected by a negative externality.
Minutes of fireworks Anita's MB (dollars per minute) Steve's MB (dollars per minute) 16 $20 $28 17 18 25 18 16 22 19 14 19 20 12 16 The table above shows Anita and Steve's marginal benefits for the annual 4th of July fireworks show at City Park. If Anita and Steve are the only two people in the economy, what is the economy's marginal benefit from the 18th minute of fireworks? Group of answer choices $38 $33 $30 $162 $129
Consider a public good that has 2 consumers, Dylan and Fred. Dylan’s demand for the public good is higher than Fred’s demand for the good. Show graphically and explain why the private market will provide an inefficient level of that public good.
Person 1 can allocate her 8-hour a day between the production of two goods. A and B. Each hour devoted to Good B yields 2 units whereas each hour devoted to Good A produces 4 units (B) Person 2 can produce 3 units of Good B or 4 units of good A per hour i) who has the absolute advantage in the production of of Good B ? ii) Who has the absolute advantage in the production of Good A ? iii) Calculate the opportunity cost for Good B for 2 persons iv) Calculate the opportunity cost for Good A for 1 person
Consider a public good that has 2 consumers, Dylan and Fred. Dylan’s demand for the public good is higher than Fred’s demand for the good. Show graphically and explain why the private market will provide an inefficient level of that public good. Please Help!!!!!!!!
Which of the following assertions regarding the economic approach is false?a. The goal of economic approach is to maximise net benefits.b. A change is economically efficient as long as marginal benefit is at least as greatas marginal cost.c. A change is economically efficient as long as the marginal social benefits exceedsmarginal private benefits.d. Economists prefer incentive-based policies to command-and-control.