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AEC445 AEC 445 Homework Assignment 3 (Texas A&M University-Commerce)

AEC445 AEC 445 Homework Assignment 3 (Texas A&M University-Commerce) | eco | Scoop.it

Via paulsinclair
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paulsinclair's curator insight, March 28, 2017 9:47 AM

1. Assume that a small town uses a referendum to overcome the free-ridership problem and determine how its residents might value a new water filtration system for its public water supply. The voting results are aggregated by the town’s two districts, yielding the following demand estimates:

2. Consider the following model for the production of refined oil:

Marginal Social Cost: MSC = 10 + 0.5Q;

Marginal External Cost: MEC = 0.3Q;

Marginal Social Benefit: MSB = 30 – 0.3Q;

Marginal External Benefit: MEB = 0,

where Q is measured in thousands of barrels per day. Use these relationships to answer questions from a through g (35 points).

3. Consider the following graph of the market for chemical solvents, production of which damages a waterbody used for recreation. Use the graph below to answer questions from a through e by stating your answers in terms of uppercase letters provided in the graph. Note that QC (or L) refers to the competitive output level and QE (or K) refers to the efficient output level (25 points). 

4. refers to the result of an inefficient market condition (5 points).

5. True or False: A public good is characterized as possessing either nonrivalry in consumption or nonexcludable benefits (5 points).

6. True or False: Positive externality is defined as an external effect that generates benefits to a third-party (5 points).

7. The Coase Theorem assumes (5 points) 

8. The set of valid claims to a good or resource that permits its use and the transfer of its ownership through sale are known as (5 points)

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Rescooped by Amber Jeanne from Homework
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AEC445 AEC 445 Homework Assignment 3 (Texas A&M University-Commerce)

AEC445 AEC 445 Homework Assignment 3 (Texas A&M University-Commerce) | eco | Scoop.it

Via paulsinclair
more...
paulsinclair's curator insight, March 28, 2017 9:47 AM

1. Assume that a small town uses a referendum to overcome the free-ridership problem and determine how its residents might value a new water filtration system for its public water supply. The voting results are aggregated by the town’s two districts, yielding the following demand estimates:

2. Consider the following model for the production of refined oil:

Marginal Social Cost: MSC = 10 + 0.5Q;

Marginal External Cost: MEC = 0.3Q;

Marginal Social Benefit: MSB = 30 – 0.3Q;

Marginal External Benefit: MEB = 0,

where Q is measured in thousands of barrels per day. Use these relationships to answer questions from a through g (35 points).

3. Consider the following graph of the market for chemical solvents, production of which damages a waterbody used for recreation. Use the graph below to answer questions from a through e by stating your answers in terms of uppercase letters provided in the graph. Note that QC (or L) refers to the competitive output level and QE (or K) refers to the efficient output level (25 points). 

4. refers to the result of an inefficient market condition (5 points).

5. True or False: A public good is characterized as possessing either nonrivalry in consumption or nonexcludable benefits (5 points).

6. True or False: Positive externality is defined as an external effect that generates benefits to a third-party (5 points).

7. The Coase Theorem assumes (5 points) 

8. The set of valid claims to a good or resource that permits its use and the transfer of its ownership through sale are known as (5 points)