EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 16.3, Problem 1MQ
To determine
Whether efficiency be achieved if transaction costs were zero but property rights did not exist.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose there are 100 farmers each with 10 acres that overlie a common groundwater aquifer. They all have identical farmland that is more productive if wells are used to pump the groundwater for irrigation. They all face a marginal cost of $10 per well. The average productivity (in $ of crop output) of the wells of the common aquifer is given by AP = 100 – W where W is the number of wells drilled into the aquifer.
1a. Assume farmers act on their own how many wells will be drilled and how much rent will the aquifer generate.
A. 45; 2025
B. 90; 2025
C. 60; 1000
D. 90; 0
E. 45; 0
F. None of the above
Explain what the Coase Theorem is.
According to the Coase Theorem, under the assumptions that transactions are
costless and damages are accessible and measurable:
an efficient outcome is possible regardless of whether property rights exist
an efficient outcome is possible as long as property rights exist, regardless of
who holds those rights
an efficient outcome is not possible in the presence of an environmental
externality
None of these answers are correct.
Chapter 16 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 16.2 - Prob. 1TTACh. 16.2 - Prob. 2TTACh. 16.2 - Prob. 1MQCh. 16.3 - Prob. 1MQCh. 16.3 - Prob. 2MQCh. 16.3 - Prob. 1TTACh. 16.3 - Prob. 2TTACh. 16.4 - Prob. 1MQCh. 16.4 - Prob. 2MQCh. 16.7 - Prob. 1MQ
Ch. 16.7 - Prob. 2MQCh. 16.8 - Prob. 1TTACh. 16.8 - Prob. 2TTACh. 16.8 - Prob. 1.1TTACh. 16.8 - Prob. 2.1TTACh. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Prob. 5RQCh. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - Prob. 10RQCh. 16 - Prob. 16.1PCh. 16 - Prob. 16.2PCh. 16 - Prob. 16.3PCh. 16 - Prob. 16.4PCh. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Prob. 16.10P
Knowledge Booster
Similar questions
- I need help. If you can explain the process and not just give the solution, I would appreciate it, because I'll learn better. A coal-fired power plant produces electricity for a town with a population of 1000. The retail price of electricity is sustained at $50.00, but every unit of electricity emission may cause damage and increased mortality risk of this amount $0.01 for every member of the town next to the plant. With a marginal cost curve MC=q and q is considered the output, what is the marginal damage of every or each unit of emission? What is the optimal quantity output for society? Is there a deadweight loss? When the electric plant decides to maximize profit and chooses q (in the cost curve), what would be the outcome?arrow_forwardAttached is the marginal abatement costs of three firms, related to the quantity of emissions. Each firm is now emitting 10 tons per week, so total emissions are 30 tons per week. Suppose we wish to reduce emissions by 50 percent, to 15 tons per week. Compare the total cost of doing this: (a) with an equi-proportionate decrease in emissions (b) with a decrease that meets the equi-marginal principle.arrow_forwardSuppose that there are two fancy hotels on the online booking platform, say W hotel and Ritz Carlton hotel. Each hotel has the capacity of 20 rooms on the New Year Eve. There are 20 families who are planning to stay at Bay Areas. Suppose that you are the manager and you set the price to maximize the hotel profit. The marginal cost of each hotel room = 500 RMB The largest valuation on the hotel room = 2000 RMB valuation decrease by 100RMS. In total, there are 20 families. Discuss with your peers how many rooms you will offer in the market.arrow_forward
- (A) Suppose that the two firms merge. Write down the profit function of the merged firm. Calculate the profit maximizing level of output, the amount of pollution for the merged firm, and its profit. Is the merger Pareto improvement? Why or why not? (B) Suppose that the merger is forbidden by the government. Instead, now the fishery has the property right to water. In other words, anybody who wants to pollute the water needs to buy a pollution right from the fishery. Let the price of the pollution right be Px. Write down the steel mill’s new profit function and the fishery’s new profit function. (C) Calculate the profit maximizing level of output for each firm, the amount of pollution, and the price of pollution right. please, please answer the three questions together..arrow_forwardFirms within the country of Anviliania are currently emitting pollutants. These pollutants cause damages within Anviliania. However, the pollutants also cause damages to the properties and health of residents of countries that share borders with Anviliania. The Marginal Abatement Costs of the firms in Anviliania can be represented by the equation MAC(Anvil.) = 750 -2.3 e The Marginal Damage Costs to the residents of Anviliania are given by MDC (Anvil.) =- - 40 + 10 e The Marginal Damage Costs to all residents (including the residents of Anviliania) are MDC (Globe) = -20+ 12 e a. Draw a diagram representing this situation. b. Determine the magnitude of the local market failure and the global market failure. c. Suppose that the Anvilianian government has given production subsidies to the firms in Anviliania. As a result, the firms have increased production (and the number of firms have increased.). Consequently, the aggregate MAC is now MAC' (Anvil.) = 800 - 2.3 e. Determine the…arrow_forwardAppalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake? Please provide the correct answer. Thank you!arrow_forward
- A4 1. Two chemical companies, A and B, operate in a small New England town. Every week A releases 40 gallons of dioxin into the town’s aquifer, while B releases 30 gallons during the same time frame. It would cost A $800 per gallon to clean up its production, while B can clean up its waste at a cost of $500 per gallon. After this issue is raised at a town hall meeting, the town’s residents vote to reduce total dioxin pollution to 20 gallons per week. a. What would be the total cost of pollution reduction if each company were limited to 10 gallons of waste per week? b. What would the total costs be if each company received 10 gallons worth of tradable pollution credits? 2. A wheat farmer and a cattle rancher occupy adjacent parcels of land. Every year the farmer builds a fence to keep the cattle out of his field, and every year the rancher tears the fence down so that the cattle can roam free. The farmer values the wheat that gets destroyed at $300, while the rancher values having a…arrow_forwardThe population of Outbacktown is 1,000 people. Each of them has a marginal benefit curve for fireworks given by：MB = 10 − 2Q dollars, where Q is the number of minutes of the fireworks display. The marginal cost is constant, each extra minute costs 5,000 dollars; thus MC = 5,000. Outbacktown is sparsely populated, and the terrain is very flat, so it is fairly safe to assume that fireworks over there are both nonrival and nonexcludable. Obtain the optimal number of minutes that the show should last. What is the Lindahl price for each individual Now suppose that the usual provider is unavailable to offer the firework display this year and the major has to go with a new provider, Mr. Smoke. Fortunately, Mr. Smoke’s marginal cost is the same as the usual provider. However, the environmental quality of Mr. Smoke’s display is not that great; it generates a negative externality in the health of the population that has been estimated to be 2 dollars per each minute of the…arrow_forwardExplain the Stolper-Samuelson theorem and Rybczynski theorem.arrow_forward
- Justify teachings of property law to students of economicsarrow_forwardRecall a sharecropping agreement is where a farmer provides a percentage of their yield to a landowner in exchange for renting the land. Consider the graph below and answer the following questions (include calculations in work): 11 VMPL 10 8 a*VMPL 5 4 3 2 1 10 15 20 25 30 35 40 45 50 55 Labor (Hour) "andınoarrow_forwardAnna and Bess are assigned to write a joint paper within a 24-hour period about the Pareto optimal provision of public goods. Let A denote the number of hours that Anna contributes to the project and B the number of hours that Bess contributes. The numeric grade that Anna and Bess earn is a function, 23 In(A + B), of the total number of hours that they contribute to the project. If Anna contributes tA, then she has (24 - A) hours in the day for leisure. Anna's utility function is UA = 23 In(A + B) + In(24 - A); and Bess' utility function is UB = 23 In(A + B) + In(24 - B). If they choose the hours to contribute simultaneously and independently, what is the Nash equilibrium number of hours that each will provide? What is the number of hours each should contribute to the project that maximizes the sum of their utilities?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education