EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 7, Problem 1SP
To determine
Explain impose of harsh fine and penalties for early-morning and late-evening disturbances.
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Scenario
DC street band, Spread Love, plays regularly on the corner of 15th St. and New York Ave, situated nicely in the heart of DC’s tourist district, near Lafayette Square and the White House. Employees in the nearby offices complain that the band is a nuisance and the noise distracts them from their work. Some offices and conference rooms in the buildings have been rendered unusable due to the noise. Employees have been forced to work wearing headphones or have brought in white-noise machines to drown out the music. The nearby law firm contacted the Secret Service and the DC police. However, the police determined that the band’s performances were legal.
Question
Are the street musicians imposing a negative or positive externality on the law firm and other employees in the area? To people and tourists walking by? To any other group not mentioned here?
Economic theory suggests that in a private market, public goods will be under-produced. Does street music satisfy the characteristics…
Airports generate many negative externalities including noise, air and water pollution, traffic
and habitat loss. On the other hand, airports generate many economic benefits to local
economies and provide a useful form of transport for residents of the areas where they are
built.
Side 19
A mine owner faces the following marginal cost (MC) function: MC= 100 +15*X
Where X is tons of the mineral extracted
The mining of the mineral has external costs. The marginal external cost (MEC) has the following function: MEC = 5*X
Where X is the tons of the mineral extracted.
The (marginal) price curve (PC) has the following function:
PC= 600 -5*X
Where X is tons of the mineral the bought
What is the optimal extraction level in tons?
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Chapter 7 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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