Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
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Chapter 7, Problem 4QFR
To determine
To explain:
Whether the concept of cost benefit analysis applies to public goods and the reason for it.
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What is cost–benefit analysis of public goods?Why is it important? Why is it hard?
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Principles of Economics (Second Edition)
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- Plants A and B emit 12 tons and 6 tons of carbon dioxide (CO2), respectively. MAC(marginal abatement costs) for a = 12 - Ea, MACb=12-2Eb MD(marginal damage) = 1/3*E (E indicates CO2 emission) What is the social optimum for power plants A and B to reduce CO2 by some amount, and how much reduction cost each power plant bears?arrow_forwardWhat is the economist’s definition of public goods? Why are public goods associated with market failure? How do the free rider problem and shirking contribute to this form of market failurearrow_forwardIdentify an external benefit that could be generated by the presence of a shopping mall for local residents.arrow_forward
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- Give typing answer with explanation and conclusion Why the market tends to fail when dealing with environmental issues? It is said many externalities in environmental economics have features that are similar to that of public goods. We know that the provision of some public goods such as lighthouse can be solved through the market rather effectively. What makes environmental goods such as clean air different from other public goods such as lighthouse? Why is it more difficult to solve the provision of clear air through the market?arrow_forwardWhat are the two characteristics of public goods? What is the free-rider problem as it related to public goods? Is U.S. border patrol a public good or a private good? Explain.arrow_forwardA) If the firm only considers its private benefits and costs, what level of production will occur? B) From a social perspective, what’s the socially efficient level of production? C) What kind of policy would ensure a social efficient outcome in this case?arrow_forward
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