6 1. To produce or to stealConsider two individuals, Jake and Latasha, living in a tıypothetical economy. They devote eight hours per day to either producing goods, stealinggoods from each other, or some combination of both actions. Suppose each individual faces the same costs and benefits schedule, presented in thefollowing table, from production and stealing.Number ofTotal Costs ofTotal Benefits fromTotal Costs ofTotal Benefits fromHoursProductionProductionStealingStealing1.$10$90$10$10$20$170$20$403$30$240$30$804.$40$300$40$130$50$350$50$1706.$60$380$60$2007.$70$400$70$220$80$410$80$230Jake will spend his first hourgoods.In equilibrium, Latasha will spendon production andon stealing per day. Suppose that each person has 12 units of resources that can be used for production, protection against stealing, or some combination of the two.When no one steals, each individual can devote all one's resources to production and produce 12 units of goods. When individuals steal, someresources must be devoted to protection against theft. Consequently, fewer than 12 units of goods will be produced by each individual.Both Jake and Latasha realize that they would be better off if neither steals from the other, and therefore, they agree not to steal from each other. Thetable shows the payoff matrix for Jake and Latasha in terms of the amounts of goods received if they hold to the agreement (Hold) and the amountsof goods received (produced and stolen from the other) if they break the agreement (Break).LatashaHoldBreakHold12, 126, 15JakeBreak15, 68,8What will be the equilibrium action for Jake and Latasha without government intervention?Both Jake and Latasha will choose to hold to the agreement and not steal from each other.O Jake will choose to hold to the agreement while Latasha will choose to break the agreement.O Both Jake and Latasha will choose to break the agreement and steal from the other.O Each individual will choose an action depending on what the other wil choose.O Jake will choose to break the agreement while Latasha will choose to hold to the agreement.

The cost that depicts the change in total cost with respect to change in total quantity is being…

Number of Total Costs of Total Benefits from Total Costs of Total Benefits from Hours Production Production Stealing Stealing $10 $90 $10 $10 $20 $170 $20 $40 3. $30 $240 $30 $80 4. $40 $300 $40 $130 $50 $350 $50 $170 6. $60 $380 $60 $200 7. $70 $400 $70 $220 $80 $410 $80 $230 Jake will spend his first hour goods. In equilibrium, Latasha will spend on production and on stealing per day.

Number of Total Costs of Total Benefits from Total Costs of Total Benefits from Hours Production Production Stealing Stealing $10 $90 $10 $10 $20 $170 $20 $40 3. $30 $240 $30 $80 4. $40 $300 $40 $130 $50 $350 $50 $170 6. $60 $380 $60 $200 7. $70 $400 $70 $220 $80 $410 $80 $230 Jake will spend his first hour goods. In equilibrium, Latasha will spend on production and on stealing per day.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 3CQQ

See similar textbooks

Similar questions

Match each diagram in Figure 1 with its description here.Assume that the economy is producing or attempting toproduce at point A and that most members of society likemeat and not fish. Some descriptions apply to more than one diagram, and some diagrams have more than onedescription.a. Inefficient production of meat and fishb. Productive efficiencyc. An inefficient mix of outputd. Technological advances in the productionof meat and fishe. The law of increasing opportunity costf. An impossible combination of meat and fish
The following table describes the productionpossibilities of two cities in the country of Baseballia:Pairs of RedSocks per Workerper HourPairs of WhiteSocks per Workerper HourBoston 3 3Chicago 2 1a. Without trade, what is the price of white socks (interms of red socks) in Boston? What is the price inChicago?b. Which city has an absolute advantage in theproduction of each color sock? Which city has acomparative advantage in the production of eachcolor sock?c. If the cities trade with each other, which color sockwill each export?d. What is the range of prices at which mutuallybeneficial trade can occur?
What are the similarities between a consumers budget constraint and societys production possibilities frontier, not just graphically but analytically?
Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?
In what ways (it) company investments in research and development create positive externalities?
53. The Indiana University basketball team trails by twopoints with eight seconds to go and has the ball. Shouldit attempt a two-point shot or a three-point shot?Assume that the Indiana shot will end the game and thatno foul will occur on the shot. Assume that a three-pointshot has a 30% chance of success, and atwo-point shot has a 55% chance of success. Finally,assume that Indiana has a 55% chance of winning inovertime.
Below is the production possibilities table for consumer goods (maize) and capital goods (tractors):Type of productionProduction possibilities A B C D Emaize 30 27 21 12 0Tractors 0 2 4 6 8i. Show these data graphically. ii. If the economy is at point C, what is the cost of one more unit of maize? iii. Suppose improvement occurs in the technology of producing tractors but not in the technology of producing maize. Draw the new production possibilities curve. iv. Now assume that a technological advance occurs in producing maize but not in producing tractors. Draw the new production possibilities curve. v. Now draw a production possibilities curve that reflects technological improvement in the production of both goods.
2. Suppose that emissions of sulfur dioxide are managed via a Cap-and-Trade policy. In this circumstance, how can an environmental group, such as Greenpeace, reduce emissions of this pollutant? Explain your answer. How would it effectively result in a reduction in emissions? What is the main obstacle for Greenpeace to achieve this? 3. Explain why a Cap-and-Trade program is more likely to be efficient than a standard. Be specific. 4. Explain why the firm’s MAC-curve is its demand curve for pollution permits.
The three residents of Smallville are consideringa fireworks display. Clark values this public goodat $80; Lana at $50; and Pete (who dislikesfireworks) at −$30. Fireworks cost the town $120,or $40 per person. The efficient outcome is for thetowna. to provide the public good because the medianperson values it more than its cost per person.b. to provide the public good because a majorityof the residents value it more than its cost perperson.c. to provide the public good because the total valueof a majority exceeds the total cost.d. not to provide the public good because the totalvalue of all residents is less than the total cost.
2.You were planning to spend Saturday working at your part-time job, but a friendasks you to go skiing. What is the true cost of going skiing? Now suppose you had been planningto spend the day studying at the library. What is the cost of going skiing in this case? Explain
1. Write down an exchange economy model with two individuals and two goods, in whichthere is no consumption externality. State and explain the key assumptions of the model.Using the model, answer the following questions:(a) Explain carefully how the concept of Pareto efficiency differs from that of socialwelfare.(b) State the Second Theorem of Welfare Economics and explain carefully why it holds.What is the importance of the assumption of convex preferences to this theorem?
Consider a municipality A and an irrigation district B with the following marginalnet benefit functions that describe net benefits from water consumption q.MNBA = 72-12qAMNBB = 30-qBRecall marginal net benefits (MNB) shows the difference between marginal benefits andmarginal costs. The quantity that maximizes net benefits is found where MNB=0.a.) Assume the municipality A and the irrigation district B have two different sources ofwater. Assume it has been a very snowy winter and there is plenty of water for everyone.How much water should be processed and consumed by each?b.)How much total surplus (net benefits) is enjoyed by each?c.) Now assume it has been a less snowy winter and water supplies are limited. Each lakecontains only 9 units of water for the season. What is the efficient water consumption foreach?d.) How much total surplus is enjoyed by each?e.) Now assume the municipality and the irrigation district have to share water from a singlelake. In the current year, only 9 total…