Government Tools: Discuss tools available to the government to correct a market failure.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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  • Government Tools: Discuss tools available to the government to correct a market failure. 
  • Supply and Demand Equilibrium: Describe how government intervention affects the supply and demand equilibrium. Refer to the simulation game to explain your responses.
  • Consumer or Producer Surplus: Specify which government interventions cause a consumer or producer surplus. Explain how they impact consumer or produce surplus.
  • Insert your responses to the following questions: How does this simulation demonstrate how individuals evaluate opportunity costs to make business decisions? Explain what role the production-possibility frontier (PPF) has in the decision-making process.]

    [Explain how comparative advantage impacts a firm’s decision to engage in trade. Would a business’s decision to trade cause a change to its PPF? Provide specific reasoning to support your claims.]

  • [Insert your responses to the following questions: What impact do policy interventions have on the supply and demand equilibrium for a product? Provide specific examples from the simulation to illustrate.]

     [What are the determinants of price elasticity of demand? Identify at least three examples. Based on the outcome of the simulation, explain how price elasticity can impact pricing decisions and total revenue of the firm.]

     [Based on the results of the simulation, can policy market interventions cause a change in consumer or producer surplus? Explain why using specific reasoning.]

Unit
Price
Value
Nuisance
1
$3.93
$1.70
$0.20
$3.55
$3.38
_$0.20
permit payoff
$0.00
total nuisance per person
-$0.40
Total
$2.00
n : 00.00 |
End of Game
Transcribed Image Text:Unit Price Value Nuisance 1 $3.93 $1.70 $0.20 $3.55 $3.38 _$0.20 permit payoff $0.00 total nuisance per person -$0.40 Total $2.00 n : 00.00 | End of Game
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