Létéris paribus, goods with "positive externalities" tend to be, by the free-market private sector; thus, in modern developed economies these goods are often. by the government. Eelect one: a. over-supplied; taxed b. under-supplied; taxed C. over-supplied; supplied or otherwise subsidized d. under-supplied; supplied or otherwise subsidized
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- A government decides that product X is a demerit good and product Y is a public good. Which policy measures is it likely to adopt in relation to the two products? Pick a,b,c, or d a. X- subsidize & Y- impose a maximum price b. X- directly provide & Y- subsidize c. X- impose a maximum price & Y- tax d. X- tax & Y - directly provideKindly assist with the above two questions. 1) Besides raising revenue, what is the most likely goal of government that enacts a per unit tax. a) to increase market competition. b) to correct for a positive externality c) to correct for a negative externality d) to encourage production of private goods. e) to increase profit and encourage production. 2) Country A can produce a gadget at a lower cost than any other producer of gadgets. As a result , Country A must have. a) a superior gadget making technology b) an absolute advantage gadget production . c) a comparative advantage in gadget production. d) a constant opportunity cost associated with gadget production e) more factors of production devoted to gadget production than any other country.What is a market-failure rationale for the government investing in education and training programs? a. Education likelyresults in a negative externality in production, so government investment corrects for the under-provision by private, unregulated markets. b. Education likely results in a positive externality in consumption, so government investment corrects for the under-provision by private, unregulated markets. c. Education likely results in a positive externality in production, so government investment corrects for the over-provision by private, unregulated markets. d. Education likely results in a negative externality in consumption, so government investment corrects for the over-provision by private, unregulated markets.
- Which of the following types of goods and services should be taxed in order to discourage their production? Which of the following types of goods and services should be taxed in order to discourage their production? Goods and services with high inocme elasticities of demand Goods and services with negative externalities Goods and services with high price elasticities of demand Goods and services with positive externalitiesDiscuss how governments decide the optimal level public good provision and then consider the impact of taxation due to such provision. Use examples to substantiate your points.What is a market-failure rationale for the government investing in transportation and infrastructure, for example roads, highways, bridges and tunnels? a. Government policy acts to correct for the under-provision of private goods by the private, unregulated market. b. Government policy acts to correct for the over-provision of private goods by the private, unregulated market. c. Government policy acts to correct for the over-provision of public goods by the private, unregulated market. d. Government policy acts to correct for the under-provision of public goods by the private, unregulated market.
- 1. Illustrate and explain the simultaneous impact of TRAIN law on the lower income group’s consumption of instant coffee. Compare and contrast the equilibrium price and quantity before and after the implementation of the law. 2. Illustrate and explain why there are very little clean Public Comfort Rooms that are free or are donation-based. Provide a possible solution to this problem (15 pts) (hint: analyze public CR as a positive externality) 3. Do you think that the TRAIN law was/is successful as a pro-poor taxation program? Why or why not?Redistributive expenditure can take the form of direct cash transfers (grants) and/or inkind subsidies. Using diagrams, discuss the merits of these two transfer types in the presence and absence of a positive externality.Price elasticity of demand for cigarettes is relatively inelastic at low prices and relatively elastic at high prices. For example, at an average of $2 per pack, the price elasticity of demand is -0.34. At an average of $10 per pack, the price elasticity of demand is -1.70. States want to tax cigarettes because of their negative externalities and to acquire revenue. Two states plan to increase their cigarette taxes by 10%. In State A, the price per pack is $2. In State B, the price per pack is $10. Given the information above, would a 10% tax increase have different effects on cigarette consumption and tax revenue in these states? Explain.
- For part B, blank options: a. does/ does not b. equal to/ larger than/ smaller than For part C, blank options: a. corrective tax/ corrective subsidy/ nonrival good b. tragedy of the commons/ cap and trade system/ socially optimal c. corrective subsidy/ corrective tax. Calculating tax incidence Suppose that the local government of Ogden decides to institute a tax on seltzer consumers. Before the tax, 20 billion packs of seltzer were sold every year at a price of $9 per pack. After the tax, 13 billion packs of seltzer are sold every year; consumers pay $12 per pack (including the tax), and producers receive $6 per pack. The amount of the tax on a pack of seltzer is $ burden that falls on producers is $ True per pack. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. False per pack. Of this amount, the burden that falls on consumers is $. per pack, and theTo minimize deadweight loss associated with taxation, policy makers should A.impose flat tax rates instead of progressive tax rates. B.impose taxes in markets with positive externalities. C.all of these D.impose taxes in markets with imperfect competition.