Principles of Microeconomics, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134069609
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 16, Problem 2.1P
To determine
Which of the statement is more persuasive about public goods and controlling of the market failure.
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The accompanying table relating to a public good provides information on the prices Young and Zorn are willing to pay for various quantities of that public good. These two people are the only members of society. Determine the price that society is willing to pay for the public good at each quantity of output. If the government’s marginal cost of providing this public good is constant at $7, how many units of the public good should government provide? Why not less? Why not more?
Define a public good and, using a graph, explain the equilibrium of a pure public good.
Suppose a political candidate criticizes a government pollution permit policy that she says lets corporations buy and sell the right to pollute. She argues that our right to breathe and the future of our planet require real regulation instead of this type of government policy.
Which of the following describes why most economists would disagree with her statement?
 A corrective tax would result in a more efficient outcome than either tradable permits or government regulation would.
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 A free market in tradable pollution permits is typically more efficient than government regulation.
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 Clean air is a fundamental right, and government regulation will allow too much pollution.
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 The environment is so important that it should be protected as much as possible, regardless of the cost.
Chapter 16 Solutions
Principles of Microeconomics, Student Value Edition (12th Edition)
Ch. 16 - Prob. 1.1PCh. 16 - Prob. 1.2PCh. 16 - Prob. 1.3PCh. 16 - A paper factory dumps polluting chemicals into the...Ch. 16 - Prob. 1.6PCh. 16 - [Related to the Economics in Practice on p. 329]...Ch. 16 - Prob. 1.8PCh. 16 - Prob. 1.9PCh. 16 - Two firms, Vesuvius and Etna, are each emitting 9...Ch. 16 - Prob. 1.11P
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- Economics: Public Economics Question: 1 Figure 3. On the graph, Q represents the quantity of foam and P represents the price of foam. Refer to Figure 3. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to (do not use $ sign) Guess: 10,000 (with margin: 0)  Question: 2 Which of the following statements is correct? a. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a faster rate. b. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a higher cost. c. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a lower cost. d. Corrective taxes distort economic incentives.  Question 3: According to the Coase theorem, externalities can be internalized when transactions costs are zero through:…arrow_forwardCan you answer with explanation and show formula.  The accompanying table relating to a public good provides information on the prices Young and Zorn are willing to pay for various quantities of that public good. These two people are the only members of society. Determine the price that society is willing to pay for the public good at each quantity of output. If the government’s marginal cost of providing this public good is constant at $7, how many units of the public good should government provide?arrow_forwardAccording to free-market economists: a. when capital goods are allocated by the market, they will go to the firms who can most profitably use them. b. when a surplus or a shortage occurs, changes in prices rapidly send information to firms and households for them to act upon. c. because of the pervasiveness of externalities, there is a role for government regulation. d. All of the above are correct. e. Both a and b are correct. f. Both a and c are correct. g. Both b and c are correct. h. None of the above are correctarrow_forward
- What is the free-rider problem? Why does the free-rider problem induce the government to provide public goods? How should the government decide whether to provide a public good?arrow_forwardDefine a public good. Give an example of a public good using your definition. Explain how to construct the market demand curve for a public good.arrow_forwardWhich of the following is a characteristic of a public good, as defined by economists? Group of answer choices -Any good that the government provides is a public good. -The good is free, such as education. -The good is nonexcludable -The good is depletable (or rivalrous).arrow_forward
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