Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 4, Problem 7RQ
Use marginal cost/marginal benefit analysis to determine if the following statement is true or false: “The optimal amount of pollution abatement for some substances, say, dirty water from storm drains, is very low; the optimal amount of abatement for other substances, say, cyanide poison, is close to 100 percent.”
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Use marginal cost/marginal benefit analysis to determine if the following statement is true or false: “The optimal amount of pollution abatement for some substances, say, dirty water from storm drains, is very low; the optimal amount of abatement for other substances, say, cyanide poison, is close to 100 percent
Which of the following statements is FALSE regarding common goods?
Multiple Choice
Water is an example of a common good.
Similar to most public goods, the marginal cost of common goods is ALWAYS zero.
Common goods are defined in economics as goods which are rival and non-excludable.
Fish stocks in international waters is an example of a common good.
Four individuals who live around a camp are hosting separate chirstmas parties, and all are considering purchasing aerial fireworks; any fireworks purchased will be set off over the camp, and thus will be visible to everyone at all of the parties. Karl’s marginal benefit from having an additional package of fireworks (which includes the benefit to himself and all of his guests) is given by MBK = 300 – 5Q, Jessica is given by MBJ = 600 – 10Q, Lara’s is given by MBL = 900 – 15Q, and Emily’s is given by MBE = 1,200 – 20Q, where Q is the total number of packages of fireworks set off at all parties. Each package of fireworks costs $800 (i.e., MC = 800).
How many packages of fireworks will actually be set off if it is left to the free market?
How much deadweight loss will result if this activity is left to the free market (as in part b)?
Chapter 4 Solutions
Macroeconomics
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 - Use marginal cost/marginal benefit analysis to...Ch. 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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- Four individuals who live around a large lake are hosting separate New Year’s Eve parties, and all are considering purchasing aerial fireworks; any fireworks purchased will be set off over the lake, and thus will be visible to everyone at all of the parties. Kevin’s marginal benefit from having an additional package of fireworks (which includes the benefit to himself and all of his guests) is given by MBK = 300 – 5Q, Jen’s is given by MBJ = 600 – 10Q, Laura’s is given by MBL = 900 – 15Q, and Emily’s is given by MBE = 1,200 – 20Q, where Q is the total number of packages of fireworks set off at all parties. Each package of fireworks costs $800 (i.e., MC = 800 A)Assuming there are no other relevant costs or benefits, what is the efficient quantity of fireworks? B)How many packages of fireworks will actually be set off if it is left to the free market? (Assume that these individuals each care only about their own benefits [including benefits to their guests] from the fireworks and are…arrow_forwardConsider the example in the table below of three homeowners residing on the banks of a lake. Assume that the lake was cleaned up to the socially efficient level and that the total costs of the cleanup were shared equally among the homeowners (stick to integer values here): Part I. Will all three homeowners be better off? (you have to calculate on your own) All are better off A and B are better off, but C is not B and C are better off but not A Part II. What problems does this bring up about sharing the costs of public goods? Society can be made better off but only on the expense of certain groups Society should not even invest in the cleaning of the lake on the first place Society can never recover public good costsarrow_forwardSuppose the Environmental Protection Agency (EPA) wants to mandate that all methane emissions must be reduced to zero in order to alleviate global warming in the United States. Which of the following describes why most economists would disagree with this policy? Reducing methane emissions is desirable, but whatever levels of pollution firms decide to emit privately are already efficient. Society would not benefit from lower air pollution. The environment isn’t worth protecting. The opportunity cost of zero pollution is much higher than its benefit.arrow_forward
- According to Ecological Economists "it is fallacious for a number of influential Economists, most notably Edward Denison and George Perry, to minimize the role of energy in production and indicated that the role of energy is primary, coequal with capital formation". Examine the economic basis for this argument.arrow_forwardEvaluate the following statement using economic analysis to back up your reasoning: "Mandating the use of ethanol in the production of gasoline helps the poor".arrow_forwardWhat is a scenario that demonstrates the concepts of scarcity, choice, and opportunity cost in the utilization of economic resources.arrow_forward
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