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- Market demand is MWTP= 50 - 2Q. Market supply is MC = 10 + 2Q. Each unit transacted results in a $4 external benefit. What is the deadweight loss from the perfectly competitive market without taxes or subsidies?How have subsidies contributed to non-sustainable forestry in US and Canada?Market demand is MWTP= 50 - 2Q. Market supply is MC = 4 + 2Q. Each unit transacted results in a $Q external benefit. What is the deadweight loss from the perfectly competitive market without taxes or subsidies?
- Explain how subsidies provided by the government to producers solve their externalitiesdiscuss in detail what are‘Market failure’ within the public sector.Large taxes on energy companies whose production activities cause environmental damage. How does this negative externality affect the allocation of resources? List three things. Include pigovian taxes and marginal costs.
- An externality is Select one: a. the uncompensated impact of one person's actions on the well-being of a bystander. b. a market equilibrium tax. c. the costs that parties incur in the process of agreeing and following through on a bargain. d. the proposition that private parties can bargain without cost over the allocation of resources.Identify a market failure(air pollution or water pollution) in Trinidad and Tobago, identify the type of market failure and discuss why market failure occured. ( public good, asymmetric information, positive or negative externality)Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome. Carefully explain how the imposition of the chosen government policy impact consumer surplus, producer surplus and total surplus in this scenario.The people of Chingola district a town in the Copperbelt province of Zambia are concerned over the activities of the local investor whose copper mining activities have resulted in the pollution of the Kafue river. Some commentators have argued that there is need for Government to come up with a tax to deal with this externality. Using your knowledge of Public sector economics, Identify the type of externality and how large tax rate should the government use in order to eliminate this externality? Why does this tax rate work? Use a diagram to illustrate your answer.
- Explain the measures used by the government to correct each of the following sourcesof market failure :(i) demerit goods(ii) Negative externality Explain the concept of market failure.The free-rider problem is that: free public transportation is overcrowded. people will not voluntarily pay for something that they can obtain without paying. government supplies goods at no charge to people who can afford to pay for them. public goods often create large external costs.An efficient government subsidy provided in cases of positive production externality, isset equal to the goods: 1) Marginal social benefit2) Price at which MSC = MSB3) Marginal external cost 4) Marginal external benefit
