Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 17, Problem 23APA
To determine
Quota and market value of water.
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Graph the following data on social and market demand: Im pretty sure I have the graph correct but I am unsure how to find the anwsers to the questions.
Price ($)
20
18
16
14
12
10
Market quantity demanded (units per month)
10
20
30
40
50
60
Social quantity demanded (units per month)
20
30
40
50
60
70
Does this product have external benefits or external costs?
How large ($) is that externality
Refer to the Figure. This graph represents the market for cigarettes. This market
Price
34
32
30
28
26
24
Social Cost
22
20
Private Cost
18
16
14
12
10
8
4
2
Demand
200
500 600
Quantity
has no externalities.
would benefit from a tax.
would benefit from a subsidy.
has no need for government intervention.
In his 1960 article, "The Problem of Social Cost," Ronald Coase uses an example of a rancher and a wheat farmer. The
problem comes from the rancher's cows crossing over onto the farmer's fields and trampling his crop. For the next
problems assume the damage to the farmer's crops is $1,000 a year and the cost of putting up/maintaining a fence is
$1,500 a year.
1. The farmer takes the rancher to court and the judge decides putting up a fence is the farmer's responsibility. What is the
nature of the externality in this problem?
A. the rancher is putting a $1000 cost on the farmer that he is not internalizing.
B. the farmer is putting a $1000 benefit on the rancher that is not internalized.
C. the rancher is putting a$1500 cost on the farmer that he is not internalizing.
D. there is no externality present because rights are defined.
2. After the court decision, will the farmer build a fence?
A. Yes
B. No
C. The rancher will build the fence
D. There is not enough information to say
3..…
Chapter 17 Solutions
Macroeconomics
Ch. 17.1 - Prob. 1RQCh. 17.1 - Prob. 2RQCh. 17.2 - Prob. 1RQCh. 17.2 - Prob. 2RQCh. 17.2 - Prob. 3RQCh. 17.2 - Prob. 4RQCh. 17.3 - Prob. 1RQCh. 17.3 - Prob. 2RQCh. 17.3 - Prob. 3RQCh. 17.4 - Prob. 1RQ
Ch. 17.4 - Prob. 2RQCh. 17.4 - Prob. 3RQCh. 17.4 - Prob. 4RQCh. 17 - Prob. 1SPACh. 17 - Prob. 2SPACh. 17 - Prob. 3SPACh. 17 - Prob. 4SPACh. 17 - Prob. 5SPACh. 17 - Prob. 6SPACh. 17 - Prob. 7SPACh. 17 - Prob. 8SPACh. 17 - Prob. 9SPACh. 17 - Prob. 10APACh. 17 - Prob. 11APACh. 17 - Prob. 12APACh. 17 - Prob. 13APACh. 17 - Prob. 14APACh. 17 - Prob. 15APACh. 17 - Prob. 16APACh. 17 - Prob. 17APACh. 17 - Prob. 18APACh. 17 - Prob. 19APACh. 17 - Prob. 20APACh. 17 - Prob. 21APACh. 17 - Prob. 22APACh. 17 - Prob. 23APACh. 17 - Prob. 24APACh. 17 - Prob. 25APACh. 17 - Prob. 26APACh. 17 - Prob. 27APACh. 17 - Prob. 28APACh. 17 - Prob. 29APACh. 17 - Prob. 30APA
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