Microeconomics: Principles Problems & Policies (McGraw-Hill Series in Economics)
20th Edition
ISBN: 9780077660727
Author: McConnell
Publisher: MCG
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Chapter 4, Problem 7DQ
To determine
The positive externality and subsidy.
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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…
P = 500 - 4Q and the (inverse ) 2. Consider the market for automobiles Let the (inverse ) market demand function be market supply function be P = - 100 + 2Q Plot the demand and supply functions and show the market equilibrium Find the equilibrium output and price in this market and show it on your graph Consumption of automobiles (driving behavior of buyers) generate negative external effects on others in society because emissions associated with driving and any increase in the probability of automobile accidents (let us assume more cars on the road lead to a higher probability of automobile accidents). Assume that the marginal external loss/damage to society from the consumption of a car is worth $60. Using the information given above, construct the marginal social benefit and marginal social cost curves as necessary d. Now calculate the efficient number of cars that should be sold and bought in the market e. Identify the net efficiency loss to society from the market level of cars…
7
. Suppose that maintaining the hiking areas costs $1.5 million annually, but financed instead by a tax of $4.41 per unit of pulp and paper production. If inverse demand for pulp and paper is given by P=15.88-(1.47/1,000,000)Q and marginal private cost is given by MPC=10, and if production of pulp and paper generates a negative externality given by MEC=4.41, then net benefits to society of preserving the hiking area will be __________________ million annually. （process of solving）
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
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