Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 14, Problem 19SQ
To determine
The quantity of cigarettes smoked.
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Two individual would be better off if they were able to negotiate an agreement that specifies each person’s contribution on public good. True or False. Compare this with voluntary contribution and when negotiation happen
Imagine that you were (unfortunately) involved in a car accident and are now in need of a lawyer to represent your interests as you attempt to secure compensation for your injuries and material losses (your wrecked car, for instance). The lawyer that you end up hiring has a lot of other clients and has an incentive to encourage you to take the first proposed settlement (dollar amount) that comes your way, even though you would prefer to hold out for the most money possible. This is an example of a___________.
a.
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Prisoner's dilemma
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Social choice problem
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Principal-agent (delegation) problem
Do you believe higher education provides our economy with a positive externality? Why or why not?
Do you believe the steps that the federal government takes to encourage the socially optimal amount of higher education be produced/consumed is appropriate? Too much? Too little? Why? (Use appropriate economic theory to support your position.)
2. Explain why according to the theory of rational ignorance, an individual will decide not to participate in the election process (vote).
Chapter 14 Solutions
Economics For Today
Ch. 14.2 - Prob. 1.1GECh. 14.2 - Prob. 1.2GECh. 14.2 - Prob. 1.3GECh. 14.2 - Prob. 2.1GECh. 14.2 - Prob. 2.2GECh. 14.2 - Prob. 2.3GECh. 14.2 - Prob. 2.4GECh. 14 - Prob. 1SQPCh. 14 - Prob. 2SQPCh. 14 - Prob. 3SQP
Ch. 14 - Prob. 4SQPCh. 14 - Prob. 5SQPCh. 14 - Prob. 6SQPCh. 14 - Prob. 7SQPCh. 14 - Prob. 8SQPCh. 14 - Prob. 9SQPCh. 14 - Prob. 10SQPCh. 14 - Prob. 11SQPCh. 14 - Prob. 12SQPCh. 14 - Prob. 13SQPCh. 14 - Prob. 14SQPCh. 14 - Prob. 15SQPCh. 14 - Prob. 16SQPCh. 14 - Prob. 1SQCh. 14 - Prob. 2SQCh. 14 - From an economic viewpoint, the optimal amount of...Ch. 14 - Prob. 4SQCh. 14 - Prob. 5SQCh. 14 - Prob. 6SQCh. 14 - Prob. 7SQCh. 14 - Prob. 8SQCh. 14 - Prob. 9SQCh. 14 - Prob. 10SQCh. 14 - Prob. 11SQCh. 14 - Prob. 12SQCh. 14 - Prob. 13SQCh. 14 - Prob. 14SQCh. 14 - Prob. 15SQCh. 14 - Prob. 16SQCh. 14 - Prob. 17SQCh. 14 - Prob. 18SQCh. 14 - Prob. 19SQCh. 14 - Prob. 20SQ
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- Explain the intuition behind why market-based instruments (emissions taxes/tradeable permits) are cost-effective, whereas uniform standards are generally not. Provide a graph for a situation where market-based instruments would alleviate a particularly-large deadweight loss relative to the command-and-control “standards” policy. Then make an argument about why we generally need some mix of both policies in the context of (1) electricity consumption and (2) land conservation.arrow_forwardQ=100-P Costs $6 to purchase a pack of cigarettes each pack smoked does $6 worth of health damage and $5 worth of secondhand health damage All consumers are aware of these costs 1. Due to an introduction of a hyper-effective tobacco fertilizer, the cost of producing a pack of cigaretts decreases to $1. How does this affect the level of smoking and the level of social loss? 2. suppose the government decides to pursue a Pigovian solution to eliminte social loss. What sort of of tax or subsidy would they implement and what is the resulting quantity of cigarette packs purchased? 3. In the case of the Coase Theorem, it is said that the socially efficient level of smokeing will occur without government intervention. how are property rights established and why might the Coase Theorem not apply in this setting?arrow_forwardEnvironmental regulation was discussed for cases in which the market is unable to price risk correctly. In those cases, regulatory agencies are often tasked with evaluating risk and with administrating any regulations imposed. What does Public Choice Theory suggest might be the outcome of these bureaucratic processes in terms of the optimal level of regulation? Why?arrow_forward
- 15. Talk about the two fundamental hypothetical perspectives on the beginnings of human forceful conduct.arrow_forwardWhat"s correct when the government requires those buying a vehicle to provide a parking space prior to granting of vehicle registration documents. A. it is unfair because there have been many who were granted registration of vehicles without complying with this rule B. it is commendable because it eliminates negative externalities C. it is to be completely opposed because it will be another source of corruption D. A and B are correct E. B and C are correctarrow_forward1. In the voluntary-contribution model considered in the lectures, the public good was national defense, and z was measured by the total number of soldiers. This total was in turn equal to the sumof the soldiers hired by both consumers, so that z = z1 + z2. We saw that the consumers acting alone hired too few soldiers, so that z was less than z*. Consider now the issue of voluntary contributions to a different type of public good: flood prevention. Imagine that two farmers cultivate land in a narrow valley next to a river. Each farmer builds a dike (i.e., an embankment) along his part of the river in order to prevent flooding during the rainy season. The height of farmer 1’s part of the dike (measured in feet) is z1, while the height of farmer 2’s part of the dike is z2. If farmer 1 wants to add extra height to his part of the dike, the cost is c for each extra foot of height added. The same cost applies to farmer 2. Since water comes over the dike at the lowest point, the flood…arrow_forward
- Question Consider two individuals, Adam and Eve, who have the following in-verse demand curves and face a marginal cost curve below. PA = 100 1/2 Qa; PE = 200 Qe MC = 2/3 Q (a) If the good is private, what is the equilibrium price and quantity in a competitive market? Is this outcome ecient? (b) If the good is public, ecient provision implies what price and quantity in the market?arrow_forwardInsurance premiums are very high for young drivers largely due to the fact that young drivers get into more automobile accidents than other drivers. Do you think that it is fair that young people are charged more for the same insurance that other drivers have? Is it fair that regardless of how good of a driver is, just because a driver is young he or she is charged more for their car insurance?arrow_forwardIf education has private benefits to an individualas well as external benefits to society, explain whya less-than-optimal amount of education occurs.arrow_forward
- What do we man by rivalry of a good? Give examples of rival and non-rival goods. To what extent is rivalry a crucial aspect of a public good?arrow_forwardThere are three individuals in a community: 1,2 and 3. Their valuations of the public good, G, are MB1=40-2G , MB2=20-G and MB3=10-G/2 . Let MCG=ACG= 12 a )Suppose the individuals must vote to determine the level of G, assuming that person 3 pays all of the cost. What will G be, according to the median voter theorem? Show your work b). Quantify the magnitude of the inefficiency caused by voting in part (a) That is, calculate the net loss of total social surplus that occurs because of the G you found in (a)arrow_forwardQ=100-P Costs $6 to purchase a pack of cigarettes each pack smoked does $6 worth of health damage and $5 worth of secondhand health damage All consumers are aware of these costs 1. Assume that the Coase Theorem actually does apply in this setting. The government passes law the gives anyone the right to forbid his neighbor from smoking. WHo benefits and who is harmed by the law and how will this affect the level of smoking?arrow_forward
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