Suppose the government assigns property rights to the airlines; that is, airlines have the right to use the airspace and the residents have no right to quiet. If the airlines and the residents engage in negotiations to achieve the socially optimal outcome, which of the following are true? (Select all that apply.) a. Quantity of air travel decreases by 20 units b. Quantity of air travel will be 120 units c. The quantity of air travel is unchanged d. None of the other options are correct e. Price of air travel increases by $60 f. The residents are made better off g. Residents will compensate the airlines to decrease flights h. The airlines will compensate the residents to increase flights i. The airlines are made worse off

Suppose the government assigns property rights to the airlines; that is, airlines have the right to use the airspace and the residents have no right to quiet. If the airlines and the residents engage in negotiations to achieve the socially optimal outcome, which of the following are true? (Select all that apply.) a. Quantity of air travel decreases by 20 units b. Quantity of air travel will be 120 units c. The quantity of air travel is unchanged d. None of the other options are correct e. Price of air travel increases by $60 f. The residents are made better off g. Residents will compensate the airlines to decrease flights h. The airlines will compensate the residents to increase flights i. The airlines are made worse off

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 2PA

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Classify each statement as true or false. True False The social cost is the sum of private and external costs When the production of goods results in pollution, private, and social costs are the same. Private costs are the costs that the firm is not obligated to disclose to the public. The terms "social cost" and "external cost" are synonyms. When the production of good results in pollution, private and social costs are different. Pollution is an example of an external cost. Wages are an example of an external cost.
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The following graph represents the market for high-emissions cars. Answer this question assuming that the externality is not internalised. 1. What is the private value of the last unit traded (or the willingness to pay of the marginal buyer) in the market? 2. What is the private cost of the last unit produced and traded (or the private cost to the marginal seller) in the market? 3. What is the social cost of the last unit traded in the market? 4. In the stylised model, what is the cost of pollution per high-emission vehicle purchased by buyers equal to?
Viral infections such as flu are highly contagious. The number of infections and thus the spread of the disease can be prevented by getting vaccinated. However, the decision to take vaccine is voluntary and some people choose not to go for it for various reasons.] [What type of externality occurs by getting vaccinated against contagious diseases? Explain your answer in 100 words or less. [In a diagram, show the market equilibrium quantity of the vaccine. Is the quantity also socially efficient? Explain in 100 words or less and demonstrate using the same diagram. [Suggest one method to achieve a socially efficient outcome. Explain your answer in 100 or less words.
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Consider two ways of commuting in a crowded city: taking public transportation, such as subway and buses, or driving your own car. A person who chooses to take public transportation in a crowded city imposes a NEGATIVE OR POSITIVE externality on drivers. A policy implication of this result is a SUBSIDY FOR OR TAX ON those who take public transportation. Persons who choose to drive their own cars to get around in a crowded city impose a NEGATIVE OR POSITIVE externality on other drivers. A policy implication of this result is a TAX ON OR SUBSIDY FOR those who drive their own cars.
The “demand” (MB) curve for pollution abatement would be given by the pollution damages that could be avoided by each successive unit of abatement. There are likely to be declining marginal benefits from each additional unit of abatement. The marginal cost of abatement is likely to start small, and then grow, yielding increasing marginal abatement costs from each additional unit of abatement. The socially efficient amount of abatement would be given by the intersection of the falling marginal benefit (avoided damages) curve and the rising marginal abatement cost curve. However, unregulated firms can often simply ignore the damages caused by the pollution they create. a. Illustrate the marginal private benefit curve, as perceived by the firm, if they don’t have to think about their pollution at all, and show the firm’s privately efficient amount of abatement. b. If the regulatory agency sets a standard for expected levels of abatement, and charges the firm a huge fine per unit if…