Musicians are much likely to supply recordings to the market if property rights are enforced. Public policy can improve economic efficiency in the presence of market failures. Complete the following table by classifying the source of market failure in each case. Market Failure. A single cable provider is the only source of internet in a certain city, giving the company the ability to influence the price of home wifi. A sewage company opened a wastewater treatment facility near a housing plan, introducing unwanted smells. Market Power O O Externality O O

Musicians are much likely to supply recordings to the market if property rights are enforced. Public policy can improve economic efficiency in the presence of market failures. Complete the following table by classifying the source of market failure in each case. Market Failure. A single cable provider is the only source of internet in a certain city, giving the company the ability to influence the price of home wifi. A sewage company opened a wastewater treatment facility near a housing plan, introducing unwanted smells. Market Power O O Externality O O

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 2.7P

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Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all local people to enter the parks or to injure either the elephants or their habitat in any way. In a second approach, the government sets up national parks and designates 10 villages around the edges of the park as official tourist centers that become places where tourists can stay and bases for guided tours inside the national park. Consider the different incentives of local villagers-who often are very poor-in each of these plans. Which plan seems more likely to help the elephant population?
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1. Choose one of the approaches listed below for protecting elephants from poachers in African countries. A. The government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all local people to enter the parks or to injure either the elephants or their habitat in any way. B. The government sets up national parks and designates ten villages around the park's edges as official tourist centers that become places where tourists can stay and bases for guided tours inside the national park. 2. Depending on the approach you have chosen (A or B), explain how the incentives will affect the local villagers, who are often very poor. 3. Which approach (A or B) seems more likely to help the elephant population?4. Discuss the practice of poaching elephants and the need for environmental protection? 5. Explain how the practice of poaching elephants is a negative externality?
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