Scenario: Developers of a new housing scheme spend money putting in roads, lighting and clearing land surrounding the scheme.1) The type of market failure represented by the scenario is a/an2) The market fails in this scenario because3) Solution to the market failure is4) The equilibrium quantity is the socially efficient quantity5) The private benefit curve is6) The private cost curve isThe efficient output is found where the SCENARIO: Developers of a new housing scheme spend money putting in roads, lighting and clearing land surrounding the scheme.(1) The type of market failure represented by the scenario is a/an(2) The market fails in this scenario because(3) Solution to the market failure is(4) The equilibrium quantity is(5) The private benefit curve is(6) The private cost curve is(7) The Efficient output is found where thethe socially efficient quantity.

Infrastructure development in new housing scheme creates social overhead capital for the housing as…

Answered: Scenario: Developers of a new housing…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 2SQ

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Identify the following situations as an example of a negative or a positive externality: You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds. Your neighbor paints his house a hideous color. Investments in private education raise your countrys standard of living. Trash dumped upstream flows downstream right past your home. Your roommate is a smoker, but you are a nonsmoker.
A city currently emits 15 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this City. What is the optimal level of sewage for this city? How can you tell?
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.

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