MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
2nd Edition
ISBN: 9780134519517
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 10P
(a)
To determine
Whether the fireworks display be offered or not.
(b)
To determine
Whether any individual will display on their own or not.
(c)
To determine
The number of people who will vote to display if each person is taxed at $20.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose an emissions standard is implemented that required each plant to reduce its pollution by 5,000 tons. What will be the Total Cost of Pollution Reduction for the entire industry?
Suppose instead of an emissions standard, the government implements a tradeable permit system. Each firm is now given 3,000 permit each (1 permit equals 1 ton of pollution allowed).
How many permits will be traded between the 2 firms?
(Hint: The total amount that need to be reduced is 10,000 tons. i.e. Q1 + Q2 = 10,000)
Three roommates, Alan, Billy and Casey, are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Table below indicates their willingness to pay for each movie:
1st movie
2nd movie
3rd movie
4th movie
5th movie
Alan
$20
$10
$0
$0
$0
Billy
$30
$20
$10
$0
$0
Casey
$50
$40
$30
$20
$10
Suppose the steaming fee is $40 per movie. How many movies should the roommates stream to achieve the most efficient outcome? Explain with the help of necessary calculations by utilizing the information in the above table.
Viral infections such as flu are highly contagious. The number of infections and thus the spread of the disease can be prevented by getting vaccinated. However, the decision to take vaccine is voluntary and some people choose not to go for it for various reasons.]
[What type of externality occurs by getting vaccinated against contagious diseases? Explain your answer in 100 words or less.
[In a diagram, show the market equilibrium quantity of the vaccine. Is the quantity also socially efficient? Explain in 100 words or less and demonstrate using the same diagram.
[Suggest one method to achieve a socially efficient outcome. Explain your answer in 100 or less words.
Chapter 9 Solutions
MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
Knowledge Booster
Similar questions
- Suppose a municipality votes to reduce the combined pollution introduced by three local companies. Presently, each firm creates 4 units of pollution in the area, for a total of 12 pollution units. The government can reduce total pollution in the area to 6 units by choosing between the following two methods: Methods to Reduce Pollution 1. The government imposes pollution standards using regulation. 2. The government issues tradable pollution permits. The costs faced by each firm are different, so it is more difficult for some firms to reduce pollution than others. The following table shows the cost faced by each firm to eliminate each unit of pollution. Assume that the cost of eliminating all 4 units of pollution (that is, reducing pollution to zero) is prohibitively expensive for all three firms. Firm Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution (Dollars) (Dollars) (Dollars) Firm…arrow_forwardSuppose you are the party who can avoid a particular external effect at the lowest cost. You might favor a general rule that assigns liability to whichever party can avoid damage at the lowest cost because the general rule implies that other parties multiple choice a. would not likely eliminate their externalities. b. would also eliminate their externalities. c. parties may or may not eliminate their externalities. d. would pay you to eliminate their externalities. I know the answer is not a. or c. it has to be either d or barrow_forwardSuppose that two individuals, Jon and David, form a community and would like to construct a communal fort that would protect them from attacks. They both consume good X, a private good, and the protection of the fort, P. One unit of good X costs 1 unit of currency, and one unit of P costs 2 units of currency. Both Jon and David have an income of 100 and a utility function of the form: U = log(Xi) + 2 × log(PJ + PD)The budget constraint for each is given by:Xi + 2 × Pi = 100 (a) Find the amount of protection Jon will provide as a function of how much David provides, and explain why the relationship is the way it is.arrow_forward
- Suppose a municipality votes to reduce the combined pollution introduced by three local companies. Presently, each firm creates 4 units of pollution in the area, for a total of 12 pollution units. The government can reduce total pollution in the area to 6 units by choosing between the following two methods:Methods to Reduce Pollution1. The government imposes pollution standards using regulation.2. The government issues tradable pollution permits.The costs faced by each firm are different, so it is more difficult for some firms to reduce pollution than others. The following table shows the cost faced by each firm to eliminate each unit of pollution. Assume that the cost of eliminating all 4 units of pollution (that is, reducing pollution to zero) is prohibitively expensive for all three firms.FirmCost of Eliminating the...First Unit of PollutionSecond Unit of PollutionThird Unit of Pollution(Dollars)(Dollars)(Dollars)Firm A 130 165 220Firm B 600 750 1,200Firm C…arrow_forwardSuppose that two individuals, Jon and David, form a community and would like to construct a communal fort that would protect them from attacks. They consume both good X, a private good, and the protection from the fort, P. One unit of good X costs 1 unit while one unit of P costs 2 units, so the budget constraint for each is given by: Xi + 2Pi = 100. Both Jon and David have an income of 100 and a utility function of the form: U = log(Xi) + 2log(Pj + Pd) (a) How much protection, P, will be privately provided? What is optimal consumption of X, the private good? (b) What are the socially optimal amounts of protection, P, and consumption, X, of the private good? How do the socially optimal amounts compare to that privately provided? Explain why.arrow_forwardThe Coase theorem states that if transactions costs are low, property rights are assigned, and parties understand how much they value something, private bargaining will result in an efficient solution to the problem of externalities. government intervention is always needed if externalities are present. a free market equilibrium is the best solution to address externalities. assigning property rights is the only thing the government should do in a market economy.arrow_forward
- Markets do not handle externalities well. With a ____________________ externality, the market produces too much of a good; whereas with a ________________________ externality, the market produces too little of a good. In both cases, if the market creates ________________ _______________, meaning the market is not efficient because it is not fully capturing the ____________ __________ of positive externalities nor the __________________ ___________ of negative externalities.arrow_forwardSuppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods: Available Methods to Reduce Pollution 1. The government sets pollution standards using regulation. 2. The government allocates tradable pollution permits. Each firm faces different costs, so reducing pollution is more difficult for some firms than others. The following table shows the cost each firm faces to eliminate each unit of pollution. For each firm, assume that the cost of reducing pollution to zero (that is, eliminating all 4 units of pollution) is prohibitively expensive. Firm Cost of Eliminating the... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution (Dollars) (Dollars) (Dollars) Firm X 90 125 180…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
- What is the principal question Coase posits when it comes to negative externalities? Who should be allowed to inflict harm on whom? Who is morally correct in any given argument about harm? How large is the harm caused?arrow_forwardSuppose the government initially allocates the permits evenly, so that before trading begins each firm needed to reduce 60 tons of pollution each (120 tons total). How many tons of pollution will each firm reduce after permit trading (i.e. what is Q1and Q2)? Q1=__ ; Q2=___arrow_forwardIf there is only one buyer and one seller meeting to exchange, then any price that they agree upon must be between the willingness to pay of the buyer and the willingness to sell of the seller.True or Falsearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning