Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
14th Edition
ISBN: 9781337198196
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 16, Problem 7E
a)
To determine
To Discuss: The problems of noise pollution by aircrafts, around an airport from an externality perspective and a solution to be proposed if there were existing housing in the vicinity of airport before the airport was built.
b)
To determine
To Discuss: The problems of noise pollution by aircrafts, around an airport from an externality perspective and a solution to be proposed if housing was built in the vicinity of airport after the airport was built.
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An example of a positive externality is:a) the profit made from the sale of electric vehicles b) the penalty paid by a coal mining company after it is caught illegally dumping toxic waste into a riverc) knowledge spillovers that result when a maker of microchips invests in research and developmentd) the price paid by an electricity company for an emission certificate on the European Trading Scheme, allowing it to emit a specified level of CO2
An example of a positive externality is:
a) the profit made from the sale of electric vehicles
b) the penalty paid by a coal mining company after it is caught illegally dumping toxic waste into a river
c) knowledge spillovers that result when a maker of microchips invests in research and development
d) the price paid by an electricity company for an emission certificate on the European Trading Scheme, allowing it to emit a specified level of CO2
The following are examples of externalities except
A Air pollution from the factory
(B) Noise pollution from construction
Low production
Pandemic
Chapter 16 Solutions
Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
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- The marginal social cost (MSC) of an electricity generating plant that uses coal is estimated by a consulting firm to be MSC=3Q, where Q is the output. The consulting firm also provides an estimate of the supply schedule. The marginal private cost (MPC) is estimated to be MPC=Q. The demand is estimated to be P=60-2Q. Given these estimates, what is the impact of the externality? How large is the over- or underproduction? What is the socially optimal price? Is there over- or under-pricing?arrow_forwardAirports generate many negative externalities including noise, air and water pollution, traffic and habitat loss. On the other hand, airports generate many economic benefits to local economies and provide a useful form of transport for residents of the areas where they are built.arrow_forwardWhat is an example of a positive externality? A) Air pollution from a factory B) Water contamination C) Vaccination against a contagious disease D) Noise pollution from a construction sitearrow_forward
- Consider an economy which is heavily dependent on tourism. To boost tourist revenue, the government has decided to reclaim the sea to build a theme park at the coastal area. This has resulted in sea pollution, reduces the fish stock and threaten the livelihoods of fishermen in the vicinity. (a)Describe the type of externality exist in the scenario. Explain with a suitable diagram and highlight the area of the efficiency loss. (b)Explain the remedial action to rectify the externality problem.arrow_forwardWith the existence of negative externality, determine the socially efficient level of output and price.arrow_forwardProvide examples of public goods or externalities that are provided successfully by market or contractual arrangements.arrow_forward
- A positive externality arises when a third party, outside the market transaction, fails to allocate resources efficiently Pays less for the good or service benefits from a market transaction pays a pollution tax to balance social costsarrow_forwardThe effect of a positive externality is similar to: A supply curve (marginal social cost) shifting to the left. A supply curve (marginal social benefit) shifting to the right. A demand curve (marginal social cost) shifting to the left. A demand curve (marginal social benefit) shifting to the right.arrow_forwardWith rental rates exceeding $3,000 per square foot per year, retail space in Causeway Bay, Hong Kong, is among the world's most expensive. In 2011, the Town Planning Board limited the height of future buildings in the area to between 130 and 200 meters. Real estate developer Hysan Group, which owns nine properties in the area, asked the Board to relax the limits, but the Board denied the application. What externality does the height restriction resolve? How would the Hysan Group benefit from relaxing the height restrictions? Should the restrictions on height be the same throughout Hong Kong?arrow_forward
- Which of the following would result in a positive externality? Group of answer choices A)A power plant in a city neighborhood causes fumes that create respiratory problems. B)A company does research on DNA that supports vaccine development. C)A restaurant provides calorie data on its menu. D)A city introduces a rental price control.arrow_forwardDistinguish carefully between a positive externality and a negative externality. Explain your answer with an example of each. (needs to be at least 100 words )arrow_forwardA negative externality is a cost associated with an action that is not borne by the person who chooses to take that action. Companies that spill oil into the ocean do not bear the full costs of the resulting harm to the marine environment, which include everything from degraded commercial fisheries to reduced endangered sea turtle populations Commuters generate emissions of air pollution, which lowers the ambient quality of the air in areas they pass through and causes health problems for other people. Developers who build houses in bucolic exurban settings cause habitat fragmentation and biodiversity loss, inciting a cost on the public at large. A positive externality is a benefit associated with an action that is not borne by the person who chooses to take that action. A homeowner who installs a rain barrel to collect unchlorinated rainwater for her garden also improves stream habitat in her watershed by reducing stormwater runoff. A delivery company that reoptimizes its routing…arrow_forward
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