In Year 2, the neighborhood decides to charge $1 per day for access to one part of the neighborhood park--the splash pad. All other areas of the park remain open to the public. In Year 2, therefore, the neighborhood realizes $20,000 in revenue. The cost to maintain the park in Year 2 remains the same ($50,000). This results in a “loss” of $45,000 for Year 2. Did the park create more or less economic value in Year 2 than in Year 1? Think about how you would answer these questions about this neighborhood park, then think about how this might apply to the USPS. 1. What positive externalities does USPS produce, and how has the value of these externalities changed over time? 2. Explain how you would calculate the economic value created by the USPS, taking into account the positive externalities it produces.
In Year 2, the neighborhood decides to charge $1 per day for access to one part of the neighborhood park--the splash pad. All other areas of the park remain open to the public. In Year 2, therefore, the neighborhood realizes $20,000 in revenue. The cost to maintain the park in Year 2 remains the same ($50,000). This results in a “loss” of $45,000 for Year 2. Did the park create more or less economic value in Year 2 than in Year 1? Think about how you would answer these questions about this neighborhood park, then think about how this might apply to the USPS. 1. What positive externalities does USPS produce, and how has the value of these externalities changed over time? 2. Explain how you would calculate the economic value created by the USPS, taking into account the positive externalities it produces.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In Year 2, the neighborhood decides to charge $1 per day for access to one part of the neighborhood park--the splash pad. All other areas of the park remain open to the public. In Year 2, therefore, the neighborhood realizes $20,000 in revenue. The cost to maintain the park in Year 2 remains the same ($50,000). This results in a “loss” of $45,000 for Year 2. Did the park create more or less economic value in Year 2 than in Year 1? Think about how you would answer these questions about this neighborhood park, then think about how this might apply to the USPS.
1. What positive externalities does USPS produce, and how has the value of these externalities changed over time?
2. Explain how you would calculate the economic value created by the USPS, taking into account the positive externalities it produces.
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