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1. What is market failure? Explain in your own words.
2. Why do markets fail. List two reasons and explain them in your own words.
3. Explain what an external effect (also known as an externality) is in your own words.
4. List four examples of externalities
5. Explain what a social dilemma is and list one example of a current social dilemma.
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Solved in 2 steps
- Question 1. What is meant by "the market system?" Question 2. How is the market system justified? Question 3. What, exactly, is "fraud?" Quesetion 4. What is an "externality?" Question 5. What is "market failure?"Instructions There is often a temptation to take a dim view of profits. Some people seem to believe profits come at the expense of buyers. It is easy to reason that if profits were lower, prices could be lower thus benefiting consumers. a. What are economic profits? Explain in detail. b. Do economic profits harm the interests of consumers? Explain in detail. c. Can there be a socially useful outcome when economic profits exist? Explain in detail. d. Do lower prices always benefit consumers? Explain in detail.1. Externalities. Answer true or false, and give a brief explanation (one sentence only). a. Pollution is a negative externality. b. The regional job creation impact of opening a new hotel is an example of an externality. c. Externalities are a form of market failure only if they are negative externalities. d. When there is a positive externality, one way to improve social welfare is to subsidize the good. e. The marginal social cost includes the marginal costs of production incurred by the firms producing the good. f. If the social cost of an additional (marginal) unit is higher than the social benefit, then society would be better off if that extra unit were produced.
- Please answer the following questions.1. Explain the factors affecting Demand.2. Explain the difference between positive and negative externalities alongwith an example.3. How are public goods different from private goods?4. Explain the Law of Supply.5. With regard to demand and Supply, explain the point of MarketEquilibrium.In what sense do positive externalities cause the so-called "invisible hand" of the marketplace to "fail"? Select one: a. Such externalities lead to government intervention in markets, which exacerbates the problems associated with externalities. Ob. Such externalities eliminate "free-riding" c. In the absence of government intervention, markets with positive externalities often fail to produce the maximur total benefit to society, as measured by total surplus. d. Markets with positive externalities produce too much of the good or service in question.#3. When pollution (a negative externality) is created by firms, which of the following is NOT a valid way for the government to restore the social optimum? a. require firms to install pollution-abatement equipment b. require firms to change production techniques to reduce emissions c. levy a tax on the production of the good d. require firms to pay for the environmental damage they create e. offer a subsidy to firms to reduce their production costs
- 1. For each of the goods listed below, discuss whether the good is likely to entail an external cost or an external benefit. Additionally, explain if the market is likely to produce more or less than the social optimal. a. Vaccinations b. Cigarettes c. Antibiotics d. Sriracha sauce#8. A party ends up spreading the coronavirus. Is that an externality? a. Yes, it is a negative externality b. Yes, it is a positive externality c. No, it is not an externality1. Describe an incentive your parents offered to you in an effort to influence your behavior. 2. Give an ideal example of a positive (consumption) externality which leads to a market failure. 3.Differentiate equality from equity. 4. Which one is better? Equality or Equity? Give an example in which the government has done such a thing.
- 3:18 Edit X 50 REE 324 - ENVIRONMENTAL ECONOMICS Review Exercise on Market Equilibrium, Market Failure, Externalities and Elasticities 1. Economics of Education. The issue of education is quite critical. The demand for education by society is high. On the other hand, it is demanded that the schools only charge low tuition fees since schools serve a social function. Thus, more often than not, tuition fee ceilings are imposed to assure students of lower prices for this "commodity". Two common solutions are proposed to address the likely problem of excess demand for educational services (ES) in the event of a tuition fee ceiling is imposition: (i) operation of public schools (e.g., free public high school); (ii) government subsidy to private education. where: Find the solutions to the problems below: D=demand for educational services S = supply of educational services Suppose we let: S: TF or P = 1 + 0.5 Q D: TF or P = 15-2Q TF or P = tuition fee or price of education ('000 pesos)…1. What makes a certain behavior unethical? * a.If it might cause harm to yourself. b.If it might cause too much happiness to others. c.If it might cause confusion to others. 2. A normative study of ethics, as is often done in philosophy or moral theology, engages the question: What could or should be considered as the right way of acting? Identify a good example that could illustrate what normative study of ethics is a .Ethics is based on the primitive practices of humans. b. Ethics is based on existing doctrines and tells us what is the prescribe human behaviors. c. Ethics is based on religious practices 3. What makes rule necessary for peace and order? * a.Rule forces people to comply with societal standards. b.Rule organizes moral development of the members of society. c. Rules guide people to do what they want and need to do. 4. Which of the following is a moral issue? a. A student finds naked painting offensive. b. A student confuse about his/her career. c. A student…Which of the following would be classified as a situation where a third-party benefits from a market transaction by others? a. City buying 10,000 trees for green space renewal projects. b. Increased levels of air pollution in neighborhoods near a football stadium. c. Allowing a mining company to use a natural lake to discharge waste. d. Two firms trading pollution credits to avoid cutting their toxic emissions.
