Principles of Microeconomics 7th Edition solutions

Principles of Microeconomics 7
Consider two ways to protect your car from theft. The Club (a steering wheel lock) makes it difficult for a car thief to take your car. Lojack (a tracking system) makes it easier for the police to catch the car thief who has stolen it. Which of these types of protection conveys a negative externality

Principles of Microeconomics 7
Consider the market for fire extinguishers.a.Why might fire extinguishers exhibit positive externalities?b.Draw a graph of the market for fire extinguishers, labeling the demand curve, the social-value curve, the supply curve, and the social-cost curve.c.Indicate the market equilibrium level of outpu

Principles of Microeconomics 7
A local drama company proposes a new neighbor-hood theater in San Francisco. Before approving the building permit, the city planner completes a study of the theaters impact on the surrounding community. a.One finding of the study is that theaters attract traf-fic, which adversely affects the communit

Principles of Microeconomics 7
Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive.a.Illustrate the market for alcohol, labeling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, a

Principles of Microeconomics 7
Many observers believe that the levels of pollution in our society are too high.a.If society wishes to reduce overall pollution by a certain amount, why is it efficient to have different amounts of reduction at different firms?b.Command-and-control approaches often rely on uniform reductions among fi

Principles of Microeconomics 7
The many identical residents of Whoville love drink-ing Zlurp. Each resident has the following willingness to pay for the tasty refreshment:First bottle$5Second bottle 4third bottle3Fourth bottle2Fifth bottle1Further bottles 0a.The cost of producing Zlurp is $1.50, and the

Principles of Microeconomics 7
Ringo loves playing rock n roll music at high volume. Luciano loves opera and hates rock n roll. Unfortunately, they are next-door neighbors in an apartment building with paper-thin walls.a.What is the externality here?b.What command-and-control policy might the landlord impose? Could such a policy l

Principles of Microeconomics 7
Figure 4 shows that for any given demand curve for the right to pollute, the government can achieve the same outcome either by setting a price with a cor-rective tax or by setting a quantity with pollution permits. Suppose there is a sharp improvement in the technology for controlling pollution.a.Usi

Principles of Microeconomics 7
Suppose that the government decides to issue tradable permits for a certain form of pollution.a.Does it matter for economic efficiency whether the government distributes or auctions the permits? Why or why not?b.If the government chooses to distribute the permits, does the allocation of permits amon

Principles of Microeconomics 7
There are three industrial firms in Happy Valley.FirmInitial Pollution LevelCost of Reducing Pollution by 1 Unita70 units$20B 80 units$25C 50 units$10The government wants to reduce pollution to 120 units, so it gives each firm 40 tradable pollution permits.a.Who sells p