Microeconomics: Principles Problems & Policies (McGraw-Hill Series in Economics)
20th Edition
ISBN: 9780077660727
Author: McConnell
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 3RQ
To determine
The efficiency loss.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Newfoundland’s fishing industry has recently declined sharply due to overfish- ing, even though fishing companies were supposedly bound by a quota agree- ment. If all fishermen had abided by the agreement, yields could have been maintained at high levels. LO4
Model this situation as a prisoner’s dilemma in which the players are Company A and Company B and the strategies are to keep the quota and break the quota. Include appropriate payoffs in the matrix. Explain why overfishing is inevitable in the absence of effective enforcement of the quota agreement.
Provide another environmental example of a prisoner’s dilemma.
In many potential prisoner’s dilemmas, a way out of the dilemma for a would-be cooperator is to make reliable character judgments about the trustworthiness of potential partners. Explain why this solution is not avail-
able in many situations involving degradation of the environment.
2.- Assume that consumers are uniformly distributed along a one-mile stretch of a beach. N ice cream vendors are pondering where to position their carts. The price that they are allowed to charge is fixed by the EACAC (Equal Access to Coolness for All Coalition). (Also, each consumer will buy exactly one ice cream.)
(a) Show that there is no equilibrium (in locations) if N=3.
(b) Suppose N=5 and vendors position their cart each at one of the (mile) points ( 1/6, 2/6, 3/6, 4/6, 5/6 ) is that an equilibrium?
Assume the cost of producing the goods is zero and each consumer will purchase each good as long as the price is less than or equal to value. Consumer values are the entries in the table.
Good X
Consumer A
Consumer B
$3,300
$2,900
Good Y
$2,500
$3,400
What is the company's total profit from selling the goods bundled together?
OA. $12,600
OB. $10,800
O C. $11.600
OD. $13,400
Chapter 4 Solutions
Microeconomics: Principles Problems & Policies (McGraw-Hill Series in Economics)
Ch. 4.A - Prob. 1ADQCh. 4.A - Prob. 2ADQCh. 4.A - Prob. 3ADQCh. 4.A - Prob. 1ARQCh. 4.A - Prob. 2ARQCh. 4.A - Prob. 3ARQCh. 4.A - Prob. 1APCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQ
Ch. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7P
Knowledge Booster
Similar questions
- Suppose that there are three beachfront parcels of land available for sale in Asilomar and six people who would each like to purchase one parcel. Assume that the parcels are essentially identical and that the minimum selling price of each is $445,000. The following table states each person's willingness and ability to purchase a parcel. Person Willingness and Ability to Purchase (Dollars) Ana 510,000 Charles 470,000 Dina 420,000 Gilberto 390,000 Juanita 380,000 Yakov 600,000 Which of these people will buy one of the three beachfront parcels? Check all that apply. A. Ana B. Charles C. Dina D. Gilberto E. Juanita F. Yakov Assume that the three beachfront parcels are sold to the people that you indicated in the previous section. Suppose that a few days after the last of those beachfront parcels is sold, another essentially identical beachfront parcel becomes available for sale at a minimum price of $432,500. This fourth…arrow_forwardDomestic is perfectly competitive with the following demand and supply curves P=28-1× QD (3) P=6+2× QS (4) Every unit produced incurs a pollution cost of r = $1 to society that firms do not pay. 3.1 How many units get produced in the inefficient market outcome in autarky? 3.2 How many units get produced in the efficient market outcome in autarky? 3.3 Which option ought to make Domestic's total surplus higher: 1 Autarky. 2 Opening to trade with a tariff of $1. 3.4 Justify your answer for 3.3: 1 Autarky, because Domestic producers will end up with small surplus 2 Autarky, because there are no terms-of-trade gains 3 Tariff, because overproduction will be mitigated 4 Tariff, because there will be terms-of-trade gainsarrow_forwardSuppose there are 11 buyers and 11 sellers, each willing to buy or sell one unit of a good, with values {$14, $13, $12, $11, $10, $9, $8, $7, $6, $5, $4,}. Assume no transaction costs and a competitive market. Now suppose competition among several market makers forces the spread down to $4. How many goods are traded? 4 B. 5 C. 6 D. 7arrow_forward
- Statement 1: Privatization provides new private owners with a strong incentive to explore new markets while exiting failing ones. Statement 2: Privatization is the process of transferring state property ownership to private persons, usually through the sale of public assets at auction Statement 3: Privatization is viewed as a means of boosting economic efficiency. Statement 4: Privatization provides new private owners with significant incentives such as higher profit margins and the ability to enhance efficiency Which of the following is false? © Both statements 1 and 2 are true O Both statements 3 and 4 are true O Options a and b are true O Options a, b, and c are all true (page 81) O None of the above are truearrow_forwardCompetitive Markets and Externalities 1.What impact do policy interventions have on the supply and demand equilibrium for a product? Provide specific examples 2.What are the determinants of price elasticity of demand? Identify at least three examples? 3.Explain how price elasticity can impact pricing decisions and total revenue of the firm? 4.can policy market interventions cause consumer or producer surplus? Explain why using specific reasoning.arrow_forwardAssume the following values for attached figures: Q1 = 20 bags. Q2 = 15 bags. Q3 = 27 bags. The market equilibrium price is $45 per bag. The price at a is $85 per bag. The price at c is $5 per bag. The price at f is $59 per bag. The price at g is $31 per bag. Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions. LO4.2 a. What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output level is being produced? How large is the dollar value of the consumer surplus at that output level? b. What is the dollar value of the deadweight loss when output level Q2 is being produced? What is the total surplus when output level Q2 is being produced? c. What is the dollar value of the deadweight loss when output level Q3 is produced? What is the dollar value of the total surplus when output level Q3 is produced?arrow_forward
- 18.7 Suppose 100 cars will be offered on the used-car market. Let 50 of them be good cars, each worth $10,000 to a buyer, and let 50 be lemons, each worth only $2,000. Compute a buyer’s maximum willingness to pay for a car if he or she cannot observe the car’s quality. Suppose that there are enough buyers relative to sellers that competition among them leads cars to be sold at their maximum willingness to pay. What would the mar- ket equilibrium be if sellers value good cars at $8,000? At $6,000?arrow_forward2. You are preparing to market this year's calf crop and want to decide if you would like to precondition your calves this year. If you decided to sell your calves at weaning, you would expect to market them at approximately 425 at price of $1.80 per pound. Alternatively, you have the option to precondition your calves for 45 days in a dry lot, castrate your bulls, and provide a round of vaccinations. You expect that the additional 45 days of feeding will get your calves up to a market weight of 550 pounds. Under normal circumstances, these calves would bring $1.65 per pound at the sale barn, but you also expect that you can charge a 6% preconditioning premium at the time of sale because you are marketing them directly. a. What is the final sale price for the 550 pound preconditioned calves? b. What is the value of gain for the preconditioned calves? c. If your cost of gain over the 45-day preconditioning period is $1.45 what would be your net profit on these calves?arrow_forwardindicate whether you think the statement is true or false andexplain why. 15. The discounted rate is usually positive.16. When constant marginal cost > 0, marginal net benefit (P-MC) increases at the rate ofinterest.17. Hotelling’s rule states that the dynamically efficient allocation occurs when the presentvalue of the marginal net benefit for the last unit produced is equal across time periods.18. Monopolist over-converse resources from a dynamic efficiency perspective.19. When the growth rate in demand exceeds the discount rate, the efficient outcome in acompetitive industry will result in a larger amount of oil available for the future period thanthe current period.20. Biofuels are a back-stop technology for oil and would cause more present production ofoilarrow_forward
- Various cultures have come up with their own methods to limit catch size and prevent fishery collapse. In old Hawaii, certain fishing grounds near shore could be used only by certain individuals. And among lobstermen in Maine, strict territorial rights are handed out so that only certain people can harvest lobsters in certain waters. Discuss specifically how these systems provide incentives for conservation. Then think about the enforcement of these property rights. Do you think similar systems could be successfully enforced for deep-sea fishing, far off shore?arrow_forward6. Consider the allocation of surface water between two types of users. The marginal net benefits are MNB, (q) =12-q, for one type and MNB, (q₂)=6-q, for the other type, where g, and q denote the quantity of water used by each type in suitable units and MNB denotes marginal net benefits in dollars per unit. a. Determine the aggregate marginal net benefit. b. Suppose there are q, 8 units of water available in a given year. Determine the efficient allocation of water to the two types. c. Suppose there are q, 4 units of water available in a given year. Determine the efficient allocation of water to the two types. d. Draw a clearly labeled graph illustrating the efficient allocation of water in parts b and c.arrow_forward1) Which is the Nash equilibrium if Boeing produces and why ? 2) Suppose home is a small exporter of wheat. At the price of $100 per ton, home growers exports 20 tons. Now Suppose the home government decides to support its domestic producer with an export subsidy of $40 per ton. Use the following figure to answer these questions. 2) Suppose home is a small exporter of wheat. At the price of $100 per ton, home growers exports 20 tons. Now Suppose the home government decides to support its domestic producer with an export subsidy of $40 per ton. Use the following figure to answer these questions. 2) Suppose home is a small exporter of wheat. At the price of $100 per ton, home growers exports 20 tons. Now Suppose the home government decides to support its domestic producer with an export subsidy of $40 per ton. Use the following figure to answer these questions. a) What is the quantity exported under free trade and with the export subsidy? b) Calculate the effect…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
