Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 28, Problem 11E
To determine
To explain:
Whether the adoption of the regulation is a justifiable move and can be supported.
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Students have asked these similar questions
Why are taxes, one traditional remedy for negative externalities, less than ideal for smoking cessation in the United States?
Nicotine is addictive/demand is inelastic, and smokers are mostly poor, so in effect cigarette taxes reduce the quality of life of people we’re trying to help without substantially reducing smoking
Demand is inelastic, and smokers are mostly rich, so they don’t reduce smoking as a result of taxes
Demand is elastic, and smokers are mostly old, so taxes reduce smoking but cause increased anxiety among the elderly
Demand is elastic, and smokers are mostly young, so they quit smoking but are then more likely to experiment with illegal drugs
From the perspective of economists which statement is true:
1.) Benefits estimates for an environmental regulation that will reduce risks to human life probably should depend on the income levels of the people who will be affected by the regulation, despite political pressures to use the identical number for everyone, regardless of their income level.
2.)None of the other statements is correct.
3.) It is wrong to use willingness to pay as a measure of the benefits from a regulation to reduce environmental mortality risks. Rich people will be willing to pay more than poor people for the same reduction in risks. If the cost of the regulation is high, it is possible that the estimated net benefits from the project will be positive for a rich community but negative for a poor community, so only the rich community will get the protection.
4.) Suppose a specific type of environmental regulation, intended to reduce mortality risks, passes a benefit-cost test in the U.S. Then…
Do COVID-19 Vaccines create external benefit? Why? Then should the government subsidize this activity?
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- Suppose a positive externality is associated with college enrollment. Assume that college instruction is sold in a competitive market and that the marginal social cost of providing it increases with enrollment. Show how a corrective subsidy to college students will increase the market price of instruction. Show the net gain in well-being possible from the subsidy and the amount of tax revenue required to finance its costs on your graph. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardPrice elasticity of demand for cigarettes is relatively inelastic at low prices and relatively elastic at high prices. For example, at an average of $2 per pack, the price elasticity of demand is -0.34. At an average of $10 per pack, the price elasticity of demand is -1.70. States want to tax cigarettes because of their negative externalities and to acquire revenue. Two states plan to increase their cigarette taxes by 10%. In State A, the price per pack is $2. In State B, the price per pack is $10. Given the information above, would a 10% tax increase have different effects on cigarette consumption and tax revenue in these states? Explain.arrow_forwardPLEASE ANSWER JUST D & E List the costs and benefits of the following hypothetical policies: A. The US government offers a $5 billion prize to the first drug company that develops a cure for Alzheimer's disease. B. The patent length for drugs to treat fatal diseases is reduced to five years and all current patents for such drugs that are already in more than five years old instantly expire. C. The European Medicines Agency announces that it will instantly approve new drug applications that have shown any promise in treating Creutzfeld-Jakob disease (also known as mad cow disease), even if there are safety concerns or if the evidence of efficacy is not conclusive. D. The US government allows patients to write themselves prescriptions on weekends, when physicians are typically not available. E. The US government mandates lower out-of-pocket costs on brand-name drugsarrow_forward
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- Pareto-optimality can theoretically be achieved, even in the presence of negative externalities, by setting a tax at the correct level. is it true or falsearrow_forwardIf a positive externality exists in a market, the unregulated market produces too little of a product at too low a price.arrow_forward
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