trouble meeting the restrictions. A possible positive externality to this idea would be that the money that businesses gain in trading their unused amount under the restrictions stimulates economic activity. Also the businesses that are buying the extra amount that they can pollute will probably attempt to pollute less so that they do not have to become dependent on other companies to prevent going over the “cap.” A possible negative externality would be that a company’s cost to produce would
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you derive the indirect utility function? 1. c. Explain Roy’s identity. Section B 3) Derive the elasticity of substitution for the Cobb-Douglas production function q ’ f (K‚ L) ’ AKaL1−a 4) What is meant by externalities? How can the problem of externalities be solved? Explain the Coase’s Theorem. 5) Explain Arrow’s Impossibility Theorem‚ giving the various assumptions. 6) What is meant by asymmetric information? In what way does the presence of asymmetric information lead to
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to the supply of exercise due to the positive externalities. In order to encourage the schoolchildren the possible policies that the government could increase the consumption of exercise would be to offer subsidies on exercise related products‚ provision of information about the benefits of exercising and the cash incentives. Subsidies on exercise should lower the price and increase the consumption of the goods‚ therefore creating more positive externality hence more benefits to the society. However
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where a higher consumption of the good is regarded as good for society‚ the government makes use of subsidies. This is why government subsidises the arts and cultural events and the distribution of condoms. To encourage consumption so that positive externalities of merit goods can be achieved for example free vaccination against infectious diseases. To overcome the information failures linked to merit goods. On grounds of equity – because the government believes that consumption should not be based
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consumer is willing to pay b) Decrease price and sell more c) Set price equal to the minimum average cost d) Increase price and sell less Question 2 The Coase theorem suggests that private markets may not be able to solve the problem of externalities‚ a) Unless the government becomes involved in the process b) When the number of parties is large and the bargaining costs are high c) If
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the social costs of producing the good or service are not minimized‚ and this results in a waste of some resources. It can also occur when personal needs are met at the cost of social well-being. One of the reasons of market failure is Negative externalities: for e.g. the effects of environmental pollution causing the social cost of production to exceed the private cost. Market failure of Dyeing Industry in Bangladesh: There is free market economy in the dyeing Industry of Bangladesh. The textile dyeing
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the real estate developer‚ more homes would be owned and that’s not what the citizens of the town want. 8. Positive externalities; Proposal-Build a dog park. Benefits-Residents have a place to take their dog(s). Cost-$625‚000 or $850‚000 offered to build houses. Decision- Yes‚ to benefit where dogs can play and no more housing because the city will be over capacitated. Negative externalities; Proposal-Building a dog park. Benefits- Money made from residents yearly bill to use park. Cost- Same. Decision-
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Differentiating Between Market Structures Eco/212: ‚ Differentiating Between Market Structures In the readings of this week we looked at some market structures and how they affect the certain areas of economic structures within the economy. In this paper we will also be exploring information given on equilibrium in relationship to the labor market‚ as well as an observation of the package deliver leader “UPS” We will first start with comparing and contrasting services and goods
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CHAPTER 12 & 14 REVIEW INCOME DISTRIBUTION‚ POVERTY‚ AND DISCRIMINATION Wealth: Income: What you own minus what you includes pay checks or wages‚ gov check‚ or Owe (includes hat you have in the dividend check or profit from selling an Bank and assets you own) investment (can have neg. income) Lorenz Curve= a graph of the actual cumulative distribution of income compared to a perfectly equal cumulative distribution of income *for the US‚ income is NOT equally distributed
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benefits of enterprise informationization well. Every customer could easily enter the network because of the quite low costs‚ and then the increasing customers will push the entire network to be an exponential growth‚ so information technology plays a positive feedback effect on the network system. On the other hand‚ based on system dynamics to analysis what the network effects will go on about e-commerce‚ finds out the relationship between the number of e-commerce network and e-commerce’s value. Therefore
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