Exam 9: Externalities and Public Goods

Scenario: Suppose there are only three houses on a street. The following table shows each homeowner's willingness to pay for street lights. It costs $700 to install a street light. -Refer to the scenario above.If each homeowners on this street is left to purchase streetlights independently,then Homeowner 1 would purchase ________,Homeowner 2 would purchase ________,and Homeowner 3 would purchase ________ streetlight(s).

Scenario: Vacant houses, foreclosed or abandoned, are typically boarded up with plywood that many people consider unsightly and likely to invite vandalism. An alternative is clear plastic (polycarbonate) panels. The figure below shows the demand and the supply of polycarbonate panels used for boarding up houses in a hypothetical town. To answer some of the questions below, it will be useful to find the equations of the three lines in the figure. -Refer to the scenario above.If only the private marginal benefits are taken into account,then ________ panels will be bought at ________ per panel.Use the equations for the demand and the supply curves.

Suppose Phillip and Mathew are the only tenants in a building.The owner of the building is considering installing surveillance cameras in the building.The following table shows the amount that Phillip and Mathew are willing to pay for each additional camera. If the cost of installing each surveillance camera is $320,how many cameras will the owner of the building install?

If the production of a good involves negative externalities,________.

Deadweight loss refers to the loss in ________.

If too little of a good is being produced in the free market,the production of the good is likely to have a ________.

Beth can earn $7,500 renting out her house.However,her neighbor has a pet dog that chases anybody who comes to look at the house.Because her neighbor has the right to keep his pet untied,Beth is unable to find a tenant.If her neighbor values keeping his pet untied at $1,500,what will the efficient outcome be in this case?

A congested street is ________ in consumption.

Which of the following gives rise to a pecuniary externality?

Which of the following can result in the tragedy of the commons?

Scenario: In Brazil, more than 60 percent of sugar cane grown is harvested by hand. In São Paulo state, nearly 300,000 workers are employed in sugar cane harvesting. Manual harvesting requires burning the cane fields prior to harvest to remove the cane's sharp leaves and drive snakes from the fields. Burning the cane fields, however, gives off large quantities of ammonia and nitrogen oxide, which lead to ozone creation. In São Paulo state, a layer of ash covers cars, and nitrogen oxide levels double during the harvest period. The nitrogen oxide produced from burning the cane fields can lead to acid rain and changes in water quality. -Refer to the scenario above.The deadweight loss arising from hand-harvesting is represented by area in the graph below.

Which of the following is likely to generate a negative externality?

Scenario: Jim and Jane are the only residents of an apartment building. The figures below show their demand curves for security guards (in hours of duty per day) who staff the entrance to the apartment. To answer some of the questions below, it will be useful to find the equations of the two lines in the figure. -Refer to the figure above.What is the maximum amount of money Jim and Jane together would pay to have 24 hours of security guards' presence?

Traffic congestion is an example of a ________.

Which of the following is an implication of the Coase Theorem?

You bought a subscription for an online magazine and shared your log-in details with a friend.Your friend is a ________ in this case.

The increasing popularity of hot dogs in a food joint has pushed up their prices,making it unaffordable for many students living in the surrounding areas.This is an example of a ________.

Pay-per-view broadcasts are ________.

Which of the following is an example of an ordinary private good?

The poaching of African elephants for their tusks is a serious problem facing many African nations.One solution is to establish large fenced-in "parks," where elephants are ranched similar to beef cattle on ranches in the western United States.Maintaining elephant herds in large enclosed park-like areas solves the problem of ________.