Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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3. Assume a city of 1,000,000 people, 60% of whom are willing to pay $1 maximum
(each) to clean up pollution. The rest of the population is wealthier and is willing to
pay $100 each to clean up pollution. Pollution clean-up costs $2,000,000. It has been
proposed that each person be taxed equally to pay for the pollution clean-up. Will
that pass a majority-rule vote? Is it desirable from the point of view of the Pareto
criterion? Is it a good idea, using the compensation principle? Which social choice
mechanism do you think is best on intuitive grounds, and why?
The graph shows the marginal social cost, supply, and demand curves in the hand sanitizer market. At what quantity could
the government set a quota to control this externality?
O 12
4
8.
Refer to the above supply and demand graph of Product X.
Q,
Quantity of Product X
What would happen if the government taxed the producers of this product because
it has negative externalities in production?
O 1) Supply would increase.
2) Demand would decrease.
O 3) Price would decrease.
4) Supply would decrease.
Price
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