1
answer
0
watching
196
views
coralox732Lv1
28 Sep 2019
Consider the market for cement production. Suppose that cementproduction emits a cloud that causes breathing problems for peoplethat live in the neighborhood, thus creating health problems forby-standers. With that in mind, answer the followingquestions.
a) (4 pts) Do the cement industry have a negative or a positiveexternality? Is it an externality in production or inconsumption?
b) (5 pts) Describe how the externality affects the private marketfor cement. Make sure your discussion uses p*& q* to indicatethe private market equilibrium price and quantity, and a pE &qE to indicate the socially optimal price and quantity.
c) (3 pts) Given this externality, list the three things that thegovernment can do to get the private market closer to the sociallyoptimal outcome.
d) (3 pts) Which of the three things you listed in part c is thebest way for the government to increase societyâs welfare? Explainwhy.
e) (2 pts) Describe Coase Bargaining by defining the CoaseTheorem.
f) (2 pts) Now suppose that the benefit of cement production forthe firm is B = $100,000 and the cost to the local community inhealth related expenses is $95,000. Should the cement be produced?Explain.
g) (2 pts) If the Coase Theorem were applied to this situation,what would be the outcome? Describe how this outcome could beachieved.
h) (3 pts) List the three things that will prevent Coase Bargainingfrom working.
Consider the market for cement production. Suppose that cementproduction emits a cloud that causes breathing problems for peoplethat live in the neighborhood, thus creating health problems forby-standers. With that in mind, answer the followingquestions.
a) (4 pts) Do the cement industry have a negative or a positiveexternality? Is it an externality in production or inconsumption?
b) (5 pts) Describe how the externality affects the private marketfor cement. Make sure your discussion uses p*& q* to indicatethe private market equilibrium price and quantity, and a pE &qE to indicate the socially optimal price and quantity.
c) (3 pts) Given this externality, list the three things that thegovernment can do to get the private market closer to the sociallyoptimal outcome.
d) (3 pts) Which of the three things you listed in part c is thebest way for the government to increase societyâs welfare? Explainwhy.
e) (2 pts) Describe Coase Bargaining by defining the CoaseTheorem.
f) (2 pts) Now suppose that the benefit of cement production forthe firm is B = $100,000 and the cost to the local community inhealth related expenses is $95,000. Should the cement be produced?Explain.
g) (2 pts) If the Coase Theorem were applied to this situation,what would be the outcome? Describe how this outcome could beachieved.
h) (3 pts) List the three things that will prevent Coase Bargainingfrom working.
a) (4 pts) Do the cement industry have a negative or a positiveexternality? Is it an externality in production or inconsumption?
b) (5 pts) Describe how the externality affects the private marketfor cement. Make sure your discussion uses p*& q* to indicatethe private market equilibrium price and quantity, and a pE &qE to indicate the socially optimal price and quantity.
c) (3 pts) Given this externality, list the three things that thegovernment can do to get the private market closer to the sociallyoptimal outcome.
d) (3 pts) Which of the three things you listed in part c is thebest way for the government to increase societyâs welfare? Explainwhy.
e) (2 pts) Describe Coase Bargaining by defining the CoaseTheorem.
f) (2 pts) Now suppose that the benefit of cement production forthe firm is B = $100,000 and the cost to the local community inhealth related expenses is $95,000. Should the cement be produced?Explain.
g) (2 pts) If the Coase Theorem were applied to this situation,what would be the outcome? Describe how this outcome could beachieved.
h) (3 pts) List the three things that will prevent Coase Bargainingfrom working.
Yusra AneesLv10
28 Sep 2019
