ECON 10a Study Guide - Midterm Guide: Margina, Perfect Competition, Natural Monopoly

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coffeetermite316

12 Dec 2015

School

Brandeis University

Department

Economics

Course

ECON 10a

Professor

Coiner Harry( Michael)

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Document Summary

Show your work or explain your reasoning so that you may get as much credit as possible. The diagrams below show the cost for 2 firms, cleanco and smog-r-us to reduce their emissions of carbon into the atmosphere. Currentlv. each firm is emittinc l0 tons of carbon. Each permit entitles its owner to emit one ton of carbon, and each firm is given 6 permits. Which firm will buy permits from the other. and how many permits will be traded: suppose a town consists of 7 fisherpeople. Each person can either fish at the town lake (which is open to everyone), or raise fish on a private fish farm in the town. If you fish on the farm, you will harvest 7 fish per day. The number offish you can catch on the lake depend on how many people are there fishing.

Related Questions

#1)

The graph below shows the marginal social benefit and marginal social cost of pollution.

A) Imagine a place like La Grande with relatively clean air. If a new regulation called for everyone to drive electric cars in order to reduce pollution, is that more likely to result in a quantity of pollution like Q1 or Q3? Please explain.

B) Would the dollar amount of the Pigovian tax necessary to make this market operate efficiently be $10, $40, $50, $60, or $100?

#2)

The graphs below show the MB of pollution curves for two firms.

A. In the absence of government intervention, how much would each of these firms pollute?

B. If firm 1 and firm 2 were each given 100 tradable permits to emit pollution (each permit allowing one unit of pollution), what would the resulting amount of pollution reduction be for both firms together? In other words, the reduction from firm 1 plus the reduction from firm 2.

C. If these firms faced a tax on pollution equal to $50 per unit of pollution, which firm would reduce pollution the most?

#3)

The graph below depicts the challenge of managing a common property resource. Based on this graph what is the efficient (optimal) price and quantity?

#4)

Why isn't the optimal level of pollution zero and what is the optimal level of pollution?

GRAPHS-SEE IMAGE LINKS BELOW

#1) http://imgur.com/Aj4xvuy

#2) http://imgur.com/wLsdOJj

#3) http://imgur.com/gthFTOC

Identifying and Providing Types of Goods

You will explain why some goods should be provided by the government and others should be provided by businesses. Given a list, correctly identify types of goods based on excludability and rivalness. Support

your answer.

TTask 1:

Consider the following list of goods. For each good, explain the following points.

Is the good rival?

Is the good excludable?

Identify the type of good (Private Good, Public Good, Common Resource, or Quasi Public Good)

Are there any externalities associated with this good?

Explain whether the private market should provide this good or the government should provide this good. Explain in terms of whether the characteristics of the good would make it difficult to be provided

by the private market or the government.

Answer for each event below.

A cup of coffee at a coffee shop

Is the good rival?

Is the good excludable?

Identify the type of good (Private Good, Public Good, Common Resource, or Quasi Public Good)

Are there any externalities associa

ted with this good?

Explain whether the private market should provide this good or the government should provide this good. Explain in terms of whether the characteristics of the good would make it difficult to be

provided by the private market or the

government.

City fire protection

Is the good rival?

Is the good excludable?

Identify the type of good (Private Good, Public Good, Common Resource, or Quasi Public Good)

Are there any externalities associated with this good?

Explain whether the private mark

et should provide this good or the government should provide

this good. Explain in terms of whether the characteristics of the good would make it difficult to be

provided by the private market or the government.

Polar bears in the Arctic

Is the good rival?

Is the good excludable?

Identify the type of good (Private Good, Public Good, Common Resource, or Quasi Public Good)

Are there any externalities associated with this good?

Explain whether the private market should provide this good or the government shoul

d provide

this good. Explain in terms of whether the characteristics of the good would make it difficult to be

provided by the private market or the government.

Clean air

Is the good rival?

Is the good excludable?

Identify the type of good (Private Good, Public Good, Common Resource, or Quasi Public Good)

Are there any externalities associated with this good?

1) According to new growth theory,

A) physical capital is nonexcludable.

B) knowledge capital is excludable.

C) knowledge capital is subject to increasing returns.

D) knowledge capital is rival and excludable.

2) Knowledge capital is nonrival in the sense that

A) two people can use the same knowledge to develop and produce a product.

B) firms do not compete to be the first to develop new technologies.

C) no single company can be excluded from the benefits of new technologies.

D) firms can benefit from the research and development of rival firms without paying for that

benefit.

3) Which of the following government provisions would help increase the accumulation of knowledge capital?

A) patents

B) copyrights

C) education subsidies

D) All of the above are correct.

4) Which of the following government policies would most likely result in an increase in economic growth?

A) a decrease in the life of a patent from 20 years to 15 years

B) a decrease in the interest rate at which the government provides student loans

C) a decrease in government spending on grants issued through the National Institutes of Health

D) decreased copyright protection on music and movies

5) Creative destruction means that

A) firms develop new products that replace old products in the economy, thereby encouraging

economic growth.

B) economic growth can only be sustained if capital depreciates rapidly.

C) knowledge capital can be created through a system of government subsidies for education and research and development.

D) research and development should only be financed if research and development are incremental (a result of making small changes to existing products).

6) Which of the following explains the ability of the U.S. economy to avoid diminishing marginal returns and experience accelerating growth in the early to mid-20th century?

A) continuing technological change

B) immigration

C) additions of a greater amount of capital of the same quality

D) a decrease in the quality of labor

7) By offering more generous unemployment insurance programs, European countries can expect

A) to pay less in taxes than in the United States.

B) workers to gain new skills quickly in response to fluctuations in the labor market.

C) shorter periods of unemployment for their workers.

D) longer periods of unemployment for their workers.

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ECON 10a Study Guide - Midterm Guide: Margina, Perfect Competition, Natural Monopoly

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