Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
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Chapter 16, Problem 20APA
To determine
The quantity of families insured premium and
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(a) Suppose that a company pays its workers $20 per hour and provides an additional $2 per hour worth of fringe benefits, including a basic health insurance policy. With the aid on an appropriate graph discuss the firm’s reaction to a state mandate that requires it expand the items covered in the health care policy.
(b) What is likely to happen to the number of people covered?
Public good is a good or service that can be consumed simultaneously by everyone and from which no individuals can be excluded. So, is health care a public good?
7.
Critically evaluate the following statement: Health is a public good?
Chapter 16 Solutions
Microeconomics (13th Edition)
Ch. 16.1 - Prob. 1RQCh. 16.1 - Prob. 2RQCh. 16.1 - Prob. 3RQCh. 16.1 - Prob. 4RQCh. 16.2 - Prob. 1RQCh. 16.2 - Prob. 2RQCh. 16.2 - Prob. 3RQCh. 16.2 - Prob. 4RQCh. 16.3 - Prob. 1RQCh. 16.3 - Prob. 2RQ
Ch. 16.3 - Prob. 3RQCh. 16.3 - Prob. 4RQCh. 16.3 - Prob. 5RQCh. 16 - Prob. 1SPACh. 16 - Prob. 2SPACh. 16 - Prob. 3SPACh. 16 - Prob. 4SPACh. 16 - Prob. 5SPACh. 16 - Prob. 6SPACh. 16 - Prob. 7SPACh. 16 - Prob. 8SPACh. 16 - Prob. 9SPACh. 16 - Prob. 10SPACh. 16 - Prob. 11APACh. 16 - Prob. 12APACh. 16 - Prob. 13APACh. 16 - Prob. 14APACh. 16 - Prob. 15APACh. 16 - Prob. 16APACh. 16 - Prob. 17APACh. 16 - Prob. 18APACh. 16 - Prob. 19APACh. 16 - Prob. 20APACh. 16 - Prob. 21APACh. 16 - Prob. 22APACh. 16 - Prob. 23APACh. 16 - Prob. 24APA
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- 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.arrow_forwardSuppose MAC = 40 - 2E and MD = 2E. Draw a graph to show and calculate the following: a) What is the social net benefit of pollution abatement at e*? b) What is the social net benefit of pollution abatement with no pollution control? c) What is the social net benefit of pollution abatement with zero pollution? d) If the actual emission level is 15, what are the total social benefit, total social cost, and net social benefit of pollution abatement? Compared with the efficient level, what is the deadweight loss (in terms of missing net social benefit)?arrow_forwardDiscuss carefully how welfare changes when the ULEZ policy is introduced. Is the social welfare higher under the ULEZ policy than without it? Which group benefits from the policy and which group is harmed by it? How does the cost of pollution C(x1, x2) change when the policy is introduced? What is the intuition behind these changes? [Suggested word count: 100 words]arrow_forward
- The south African government develops targets that pertain to healthcare and education. Which of the following statements explains why government provides these two goods? A. The benefit to society of healthcare and education is extremely low. B. The benefits that society receives from health care and education exceed those that accrue to an individual user. C . The government spends money on health care and education because they are public goods D. Health care and education only produce negative externalities.arrow_forwardDraw the following situations as a graph format: 1. The graph will have the price (P) on the y-axis and quantity (Q) on the x-axis. The demand or marginal private benefit curve (PMB) will be the same as the social marginal benefit (SMB) curve and it is sloping downwards. The PMC will be lower than the SMC and upward sloping. The social optimal is where SMC and PMB meet and at this point, the P is higher and Q is lower than the P where PMC and PMB meet. Since there is no restriction, the firm produces where PMC and PMB meet. 2. The graph will have the price (P) on the y-axis and quantity (Q) on the x-axis. The Deadweight Loss (DWL) is captured by the triangular area whose height is the gap between the social output and the firm’s output and base is the external cost (point on SMC where the firm is producing minus the point where PMC=demand).arrow_forward3. Jonny, Ken, and Lenny each value fire protection differently. Jonny’s demand for the public good is Q = 210 − 30P, Bill’s demand is Q = 210 − 15P, and Coco’s demand is Q = 132 − 12P. If the marginal cost of providing fire protection is $30.00. a. What is the socially optimal level of fire protection provision? b. Under Lindahl pricing, what share of the tax burden would each of the three people pay?arrow_forward
- For a pollutant like lead, which causes health effects to local residents even at very low levels, which regulatory approach would be most effective for eliminating any health threats? Question 4Select one: a. Emissions standards b. Tradable permits c. Pollution taxes d. Pollution subsidies e. Ecolabelingarrow_forward. Some dissenting scientists at Environment Canada disagree with the estimate of $1.50 for theenvironmental externality. They believe that the incidence of the externality is not constant acrossdifferent levels of production; instead the size of the externality is proportional to the level of output.That is, the larger is the output, the larger is the externality. Their research suggests that the truesocial cost of cereal production diverges from private costs at every level of production by an amountequal to ten percent of production (note: ten percent, not ten percentage points).The government would like to know the economic effects of implementing a tax to internalise theexternality in this case. Draw the diagram for this market and policy. Solve for all relevant Ps and Qs.Calculate producer surplusarrow_forwardWhat is the primary reason why social insurance exists? a-the moral hazard problem increases costs of providing private insurance. b-the adverse selection problem prevents private markets from offering the optimal quantity of insurance. c-the government is usually better at allocating resources than private markets. d-all of these.arrow_forward
- Suppose the demand and supply curve for crude oil at any given period is: Pd= =380−3Q and Ps=28+1Q Where price is measured in dollars and quantity is measured in barrels. Furthermore, for each barrel of oilproduced, there is $32 worth of negative externality. The market currently unregulated and produces 88 barrels of oil and the market price is $116. Externality, Part A: What is the Total Social Welfare before government regulation?arrow_forwardIllustrate using your own words and a suitable example the effect of negative externality such as polution on market efficiency, Draw a supply-and-demand diagram to explain the effect polustion. and show how the problem caused by polution can be solved without government intervention.arrow_forwardAssuming no transaction costs, which legal rule best harnesses private information to deal with externalities? A. A liability rule B. A property rule C. An inalienability rule D. Criminalizationarrow_forward
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