Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 5.4.5PA
To determine
Whether Yosemite and other national parks are public goods.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A local school administrator is concerned that flu outbreaks are putting children at risk, so she proposes that the state should subsidize flu shots in order to increase coverage rates.
-Are the administrator’s concerns valid—are too few children getting flu shots—and will a subsidy help?
-The school nurse suggests publishing a list of which kids did not get a flu shot, in the hope that public shaming will lead people to vaccinate their children. Is this strategy likely to work?
Suppose two bars, “the Last Jar” and “Prince Alfred”, can choose to sell a pint of beer for either $10 or $12. For simplicity, assume that: these are the only two possible prices; there are no costs (e.g., there is no cost for obtaining and serving the beer), and each customer drinks exactly one pint of beer. There are two types of customers: professors and students. Professors are not price-sensitive and go to the bar closest to their department’s building. Thus, 50 professors from the Melbourne School of Engineering go to Prince Alfred, while 50 professors from the Melbourne Graduate School of Education go to the Last Jar. Meanwhile, the students, who are 200 in total, are price sensitive. They go to the bar with the lowest price –or, if both bars charge the same price, then they split evenly.
Simultaneous game: Suppose that the two bars must choose what price to set simultaneously.
a) Write the normal form of the game.
b) What is the Nash Equilibrium (NE) of this game?
Suppose two bars, “the Last Jar” and “Prince Alfred”, can choose to sell a pint of beer for either $10 or $12. For simplicity, assume that: these are the only two possible prices; there are no costs (e.g., there is no cost for obtaining and serving the beer), and each customer drinks exactly one pint of beer. There are two types of customers: professors and students. Professors are not price-sensitive and go to the bar closest to their department’s building. Thus, 50 professors from the Melbourne School of Engineering go to Prince Alfred, while 50 professors from the Melbourne Graduate School of Education go to the Last Jar. Meanwhile, the students, who are 200 in total, are price sensitive. They go to the bar with the lowest price –or, if both bars charge the same price, then they split evenly.
Sequential game:
a) Suppose the Last Jar chooses what price to set first. Then, after observing the price set by the Last Jar, Price Alfred chooses what price to set. Draw the extensive form…
Chapter 5 Solutions
Microeconomics (7th 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 - Prob. 5.1.10PA
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. 5.4.12PACh. 5 - Prob. 5.1CTECh. 5 - Prob. 5.2CTE
Knowledge Booster
Similar questions
- Power stations emit sulfur dioxide as a waste product. This generates a cost to society that is not paid for by the firm; therefore, pollution is a negative externality of power production. Suppose the government wants to correct this market failure by getting firms to internalize the cost of pollution. To do this, the government can charge firms for pollution rights (the right to emit a given quantity of sulfur dioxide). The following graph shows the daily demand for pollution rights.arrow_forwardCurrent research on kidney transplants (see https://www.organdonor.gov/learn/organ-donation-statistics) shows that 17 people a day die while waiting for an organ. This is because: Of the negative externalities that prevent the government from legalizing the buying and selling of organs. Because demand is greater than supply, reflecting the fact that people should be more willing to donate their organs. Because the rationing role of prices is not legally allowed to work in this instance. Because organ prices are so high, most poorer people cannot afford one. A and D only.arrow_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
- In an article in the agriculture magazine Choices, Oregon State University economist JunJie Wu made the following observation about the conversion of farmland to urban development: Land use provides many economic and social benefits, but often comes at a substantial cost to the environment. Although most economic costs are figured into land use decisions, most environmental externalities are not. These environmental "externalities" cause a divergence between private and social costs for some land uses, leading to an inefficient land allocation. For example, developers may not bear all the environmental and infrastructural costs generated by their projects. Such "market failures" provide a justification for private conservation efforts and public land use planning and regulation. What does the author mean by market failures and inefficient land use allocation? Explain why the author describes inefficient land allocation as a market failure. Illustrate your argument with a…arrow_forwardMany countries have recently passed bans on smoking in restaurants and bars. What is the economic rationale behind these bans? Would there be similar rationales for banning smoking in automobiles? Apartment buildings? Houses?arrow_forwardWith the help of appropriate diagrams, explain how a tax can be used to reduce the consumption of a harmful product such as cigarettes.arrow_forward
- John Cassidy, a writer for the New Yorker magazine, wrote a blog post arguing against New York City’s having installed bike lanes. Cassidy complained that the bike lanes had eliminated traffic lanes on some streets as well as some on-street parking. A writer for the Economist magazine disputed Cassidy’s argument with the following comment: “I hate to belabor the point, but driving, as it turns out, is associated with a number of negative externalities.” What externalities are associated with driving? How do these externalities affect the debate over whether big cities should install more bike lanes? J. Cassidy. Battle of the Bike Lanes. New Yorker, March 8, 2011. The World Is His Parking Spot. Economist, March 9, 2011. Initial Response should be at least 250 words and should include at least one reference in APA format. The Peer Response should be at least 100 words and add value.arrow_forwardEconomists Kenneth Chay and Michael Greenstone found that in the two years following the passage of the Clean Air Act of 1970, the sharp reduction in air pollution also led to a decline in infant deaths. Although this and other studies provide compelling evidence of the link between pollution and infant health, it is not clear that reductions from the much lower levels of ambient pollution today would have the same effect. Which of the following reasons could explain this? A. Today, the level of pollution is much higher. Therefore, it will take a much larger reduction in air pollution to reap benefits similar to those in 1970. B. When levels of pollution are high, the marginal benefit of reducing pollution also is high. It follows therefore that the benefit of reducing air pollution in 1970 would be much higher than the benefit from a proportional reduction in air pollution today when the level of pollution is much lower. C. When levels of pollution are…arrow_forwardWhenever we think of a resource, say forest, the value that immediately comes to our mind is the utility that we drive directly from the resource, such as timber. However as environmental scientist, we know that a forest has other values other than direct use value of economic value of a resource. Provide suggestions to address market failure in the above situation.arrow_forward
- If a third party in a market transaction incurs a positive benefit/externality, how can this transaction result in inefficiency or deadweight loss in a market from societal perspective. Use a graph and an example to explain your answer.arrow_forwardIn the past, some counties and countries have imposed taxes on sugar, saturated fats, and food made with those ingredients as a way to reduce consumption of those foods. Assume the government imposes a unit tax on all chocolate. Answer the following questions Is there an externality from consuming chocolate? Explain why or why not. Use a correctly labeled graph to show what happens in the market for chocolate as a result of the unit tax. On your graph, show the market equilibrium before and after the tax (i.e. show the equilibrium prices and quantities.) Show graphically what happens to consumer surplus and producer surplus after the tax (you may need a separate graph to show this.) Will consumers be able to shift this tax to sellers? If yes explain why/how. If no explain why not. Based on your answer to c, who will bear the incidence of this tax? Show this on a graph. How will consumers respond to the tax on chocolate? How will candy companies respond strategically to the tax on…arrow_forwardWhat would be an example of a negative externality? What would be an example of a positive externality? What types of regulations do you think are the most effective to induce firms to pollute less?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning