Principles of Macroeconomics (12th Edition)
12th Edition
ISBN: 9780134078809
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 3.3P
Subpart (a)
To determine
Efficiency argument.
Subpart (b)
To determine
Non monitory cost arises due to legalizing marijuana use.
Subpart (c)
To determine
Equity argument of legalizing marijuana.
Subpart (d)
To determine
Flow of revenue from legalization of marijuana.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
In his State of the Union address in 2003, President Bush supported the idea of changing from the use of internal combustion engines to fuel cells based on hydrogen as a way of reducing air pollution and the emission of greenhouse gases. Fuel cells are nonpolluting because they only emit water vapor. President Bush proposed having the government subsidize research and development of hydrogen fuel and fuel cell technology. The president did not propose raising taxes on gasoline as a way of encouraging the use of fuel cells and reducing greenhouse gases. Currently, hydrogen is more expensive than gasoline.
Would an increase in the tax on gasoline encourage the development of hydrogen-based fuel cell technology for automobiles?
In 2020, the International Monetary Fund prescribed a carbon tax as the best way for governments around the world to meet their carbon emissions targets. A carbon tax is an economywide tax levied per tonne of carbon emitted by firms as a by-product of their production. Such a tax will likely increase business costs in the short run, especially for those firms whose production processes emit significant amounts of carbon. In the longer term, however, it is hoped that the tax will provide incentives for firms to invest in alternative production techniques that emit less carbon. Using the AD-AS framework, explain how the imposition of such a tax might impact inflation, economic activity and employment in the short run and the long run.
Can you please please please show it in a graph the AD-AS framework its very important. Please have a through look and answer it.
In late 1991 two firms, Delta Airlines and the Trump Shuttle, provided air shuttle service between New York and Boston or Washington. The one-way price charged by both firms was $142 on weekdays and $92 on weekends, with lower off-peak advance purchase fares. In September 1991 Delta increased the per-trip shuttle mileage given to members of the Delta frequent-flier pro- gram from 1,000 to 2,000 miles, even though actual mileage from New York to either Boston or Washington is about 200 miles. Moreover, Delta also offered an extra 1,000 miles to frequent fliers who made a round-trip on the same day, raising a possible day’s total to 5,000 miles. Almost simultaneously, Trump changed the frequent-flier mileage it gave shuttle passengers. (It participated in the One Pass frequent-flier program with Continental Airlines and some foreign carriers.) What sorts of changes do you think Trump made? Why
Chapter 1 Solutions
Principles of Macroeconomics (12th Edition)
Knowledge Booster
Similar questions
- The City of Ditty passes a law that requires all pizza delivery persons to sing to customers when delivering pizza. Tone Deaf, the owner of the “No Frills Pizza Restaurant” challenges the law as being a denial of Equal Protection of the Laws because pizza delivery persons are being treated differently from other delivery persons or other restaurant employees. The City of Ditty claims that its governmental interest in passing the law was part of its overall economic plan to attract music industry type businesses to Ditty by creating a “music-friendly” city. If the Court finds this to be a legitimate governmental interest, what else must Ditty prove in order to win its case? the law is necessary to achieve that interest. the law directly advances that interest. the law creates the least restrictions on important fundamental rights while advancing that interest. the law is reasonably related to achieving the legitimate interest. the law is supported by more than half the city…arrow_forwardAfter Hurricane Maria, hundreds of nonprofit organizations streamed to Puerto Rico and other Caribbean islands to provide disaster relief. Research has found that coordination between nonprofits during disasters is difficult to maintain—it’s easy for individual nonprofits to fundraise and pursue programming on their own while ignoring other organizations working on the same issues. Additionally, there are incentives to do projects that are cheap and have fast turnaround, since donors respond to the visibility of organizations providing disaster relief. Consider two nonprofit organizations working in Puerto Rico. Together, they could spend time coordinating their efforts and run a shelter for hurricane victims, providing each organization with 100 utils. Alternatively, they could individually distribute paper towels—a simple, low-cost, fast, and visible project—and receive 5 utils. This situation can be modeled with the following payoff matrix: Nonprofit 2 Run Shelter…arrow_forwardYou work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, raskels, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin patties decreases by 20%, the quantity of raskels sold decreases by 22% and the quantity of cannies sold increases by 7%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price…arrow_forward
- You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: guppy gummies, frizzles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies decreases by 5%, the quantity of frizzles sold decreases by 4% and the quantity of kipples sold increases by 6%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together. Relative to Guppy Gummies Recommend Marketing with Guppy Gummies Cross-Price…arrow_forwardMicroeconomics and macroeconomics Determine whether each of the following topics would more likely be studied in microeconomics or macroeconomics. Microeconomics Macroeconomics A consumer's optimal choice when buying a flat-screen TV The effect of government regulation on a monopolist's production decisions The government's decision on how much to spend on public projects Understanding opportunity cost You work as an assistant coach on the university swim team and earn $15 per hour. One day, you decide to skip the hour-long practice and go to the county fair instead, which has an admission fee of $9. The total cost (valued in dollars) of skipping practice and going to the fair (including the opportunity cost of time) is .arrow_forwardAndy, Brad, and Carly are playing a new online video game: Zombie Civil War. Each has an army of 100 zombies and must decide how to allocate them to battle each of the other two players’ armies. Three simultaneous battles are occurring: one between Andy and Brad, one between Andy and Carly, and one between Brad and Carly. Let Ab denote how many zombie soldiers Andy allocates to his battle with Brad, with the remaining 100 - Ab soldiers in Andy’s zombie army assigned to the battle with Carly. Bc denotes the number of zombie soldiers that Brad allocates to his battle with Carly, and 100 - Bc zombies go to his battle with Andy. Ca is the the number of zombie soldiers that Carly allocates to the battle with Andy, and 100 - Ca in her battle with Brad. To see how payoffs are determined, consider Andy. If Ab > 100 - Bc, so that Andy has more zombies than Brad in the Andy-Brad battle, then Andy wins the battle and receives w points where w > 2. If Ab = 100 - Bc, so that Andy and Brad…arrow_forward
- Question 1: Microsoft sells two types of office software, a word processor it calls Word, and a spreadsheet it calls Excel. Both can be produced at zero marginal cost. There are two types of consumers for these products, who exist in roughly equal proportions in the population: authors, who are willing to pay $120 for Word and $40 for Excel, and economists, who are willing to pay $50 for Word and$150 for Excel. a. Suppose that Microsoft execs decide to sell Word and Excel separately. What price should Microsoft set for Word? (Hint: Is it better to sell only to authors, or to try to sell to both authors and economists?)What price should Microsoft set for Excel?What will Microsoft’s profit be from a representative group of one author and one economist?b. Suppose that Microsoft decides to bundle together Word and Excel in a package called Office, and not offer them individually. What price should Microsoft set for the package?How much profit will Microsoft generate from a representative…arrow_forwardSuppose the Environmental Protection Agency (EPA) wants to mandate that all methane emissions must be reduced to zero in order to alleviate global warming in the United States. Which of the following describes why most economists would disagree with this policy? Reducing methane emissions is desirable, but whatever levels of pollution firms decide to emit privately are already efficient. Society would not benefit from lower air pollution. The environment isn’t worth protecting. The opportunity cost of zero pollution is much higher than its benefit.arrow_forwardSpotify, Pandora, and iHeart Radio are some of the more popular music streaming services. These companies offer free access to music. For a small monthly fee, users can purchase premium access and listen to millions of songs on demand and ad-free. But not all artists are fans of free streaming music. Taylor Swift’s move to prevent Spotify from playing her 2016 release, 1989, for free made national headlines. When Spotify refused to restrict access to only paying customers, Swift would not allow the company to play her music for free. She is not alone. Adele, Dr. Dre, Garth Brooks, and Coldplay have all had run-ins with free streaming services. i. If music-lovers obtain music and video content via free music streaming services instead of buying it directly or paying for premium access, what would the record companies’ producer surplus be from music sales? Producer surplus for record companies would... a. be greater than if people had to pay for the music. b. depend on how…arrow_forward
- A century ago this month, the Addison Act was passed in the UK placing a duty on local authorities to take up the gauntlet of providing 500,000 new homes within three years. Typically, housing had been built by private developers with an eye on turning a profit, but the Tudor Walters Report recommended that new homes were not to be cramped terraced houses packed into available space, but rather open and airy, low-density garden suburbs. The report mandated several designs and layouts of generous proportions, with gardens attached to all. In the last decade the number of homes built by both public and private providers combined has averaged only a paltry 159,000 each year. Most new homes are built by about a dozen big housebuilding firms, such names as Persimmon, Bellway, Barratt and Taylor Wimpey. Chasing financial returns tends to lead to a short-term view of shareholdings, seeking immediate gain over longevity and loyalty. The nine key housebuilding firms had a combined turnover of…arrow_forwardA century ago this month, the Addison Act was passed in the UK placing a duty on local authorities to take up the gauntlet of providing 500,000 new homes within three years. Typically, housing had been built by private developers with an eye on turning a profit, but the Tudor Walters Report recommended that new homes were not to be cramped terraced houses packed into available space, but rather open and airy, low-density garden suburbs. The report mandated several designs and layouts of generous proportions, with gardens attached to all. In the last decade the number of homes built by both public and private providers combined has averaged only a paltry 159,000 each year. Most new homes are built by about a dozen big housebuilding firms, such names as Persimmon, Bellway, Barratt and Taylor Wimpey. Chasing financial returns tends to lead to a short-term view of shareholdings, seeking immediate gain over longevity and loyalty. The nine key housebuilding firms had a combined turnover of…arrow_forwardA century ago this month, the Addison Act was passed in the UK placing a duty on local authorities to take up the gauntlet of providing 500,000 new homes within three years. Typically, housing had been built by private developers with an eye on turning a profit, but the Tudor Walters Report recommended that new homes were not to be cramped terraced houses packed into available space, but rather open and airy, low-density garden suburbs. The report mandated several designs and layouts of generous proportions, with gardens attached to all. In the last decade the number of homes built by both public and private providers combined has averaged only a paltry 159,000 each year. Most new homes are built by about a dozen big housebuilding firms, such names as Persimmon, Bellway, Barratt and Taylor Wimpey. Chasing financial returns tends to lead to a short-term view of shareholdings, seeking immediate gain over longevity and loyalty. The nine key housebuilding firms had a combined turnover of…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning