Economics, Student Value Edition Plus MyLab Economics with Pearson eText - Access Card Package (6th Edition)
6th Edition
ISBN: 9780134421322
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 5, Problem 5.4.12PA
To determine
The economic problem that the elders were trying to prevent.
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Q. 2
Suppose that the government does not intervene in the market. Compute country B’s welfare under autarky and free trade with the negative production externality.
Briefly explain if country A’s welfare is affected by the production externality in B.
Do you agree with the claim that welfare under free trade (compared to autarky) improves in both countries when a negative production externality is present ?
Briefly explain why
Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is the willingness to pay for each film.
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Dwayne
Javier
Salman
Chris
First Film
$7
$5
$3
$2
Second Film
6
4
2
1
Third Film
5
3
1
0
Fourth Film
4
2
0
0
Fifth Film
3
1
0
0
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Within the dorm room, is the showing of a movie a public good? Why or why not?
If it costs $8 to stream a movie, how many movies should the roommates stream to maximize total surplus?
If they choose the optimal number from part (b) and then split the cost of streaming the movies equally, how much surplus does each person obtain from watching the movies?
Is there any way to split the cost to ensure that everyone benefits? What practical problems does this solution raise?
Suppose they agree in advance to choose the optimal number of movies and split the cost equally. When Dwayne is asked his willingness to…
The following graph (see link below) represents the market for high-emission cars. Answer the following questions assuming that the externality is not internalised.
- What is the social value of the last unit traded on the market?
- What is the social cost of the last unit traded on the market?
- Which quantity is socially optimal (what is the effecient quantity)?
- What is the deadweight loss generated by the externality?
Chapter 5 Solutions
Economics, Student Value Edition Plus MyLab Economics with Pearson eText - Access Card Package (6th Edition)
Ch. 5 - Prob. 5.1.1RQCh. 5 - Prob. 5.1.2RQCh. 5 - Prob. 5.1.3RQCh. 5 - Prob. 5.1.4RQCh. 5 - Prob. 5.1.5RQCh. 5 - Prob. 5.1.6PACh. 5 - Prob. 5.1.7PACh. 5 - Prob. 5.1.8PACh. 5 - Prob. 5.1.9PACh. 5 - In a study at a large state university, students...
Ch. 5 - Prob. 5.1.11PACh. 5 - Prob. 5.1.12PACh. 5 - Prob. 5.1.13PACh. 5 - Prob. 5.2.1RQCh. 5 - Prob. 5.2.2RQCh. 5 - Prob. 5.2.3RQCh. 5 - Prob. 5.2.4PACh. 5 - Prob. 5.2.5PACh. 5 - Prob. 5.2.6PACh. 5 - Prob. 5.2.7PACh. 5 - Prob. 5.2.8PACh. 5 - Prob. 5.2.9PACh. 5 - Prob. 5.2.10PACh. 5 - Prob. 5.2.11PACh. 5 - Prob. 5.3.1RQCh. 5 - Prob. 5.3.2RQCh. 5 - Prob. 5.3.3RQCh. 5 - Prob. 5.3.4PACh. 5 - Prob. 5.3.5PACh. 5 - Prob. 5.3.6PACh. 5 - Prob. 5.3.7PACh. 5 - Prob. 5.3.8PACh. 5 - Prob. 5.3.9PACh. 5 - Prob. 5.3.10PACh. 5 - Prob. 5.3.11PACh. 5 - Prob. 5.3.12PACh. 5 - Prob. 5.3.13PACh. 5 - Prob. 5.3.14PACh. 5 - Prob. 5.3.15PACh. 5 - Prob. 5.3.16PACh. 5 - Prob. 5.4.1RQCh. 5 - Prob. 5.4.2RQCh. 5 - Prob. 5.4.3RQCh. 5 - Prob. 5.4.4PACh. 5 - Prob. 5.4.5PACh. 5 - Prob. 5.4.6PACh. 5 - Prob. 5.4.7PACh. 5 - Prob. 5.4.8PACh. 5 - Prob. 5.4.9PACh. 5 - Prob. 5.4.10PACh. 5 - Prob. 5.4.11PACh. 5 - Prob. 5.4.12PA
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