Questions from General Economics

Q: For each of the following pairs of firms, explain which firm

For each of the following pairs of firms, explain which firm would be more likely to engage in advertising. a. a family-owned farm or a family-owned restaurant b. a manufacturer of forklifts or a manu...

Q: What are corrective taxes? Why do economists prefer them to regulations

What are corrective taxes? Why do economists prefer them to regulations as a way to protect the environment from pollution?

Q: Imagine that you are a nonsmoker sharing a room with a smoker

Imagine that you are a nonsmoker sharing a room with a smoker. According to the Coase theorem, what determines whether your roommate smokes in the room? Is this outcome efficient? How do you and your...

Q: Draw a supply-and-demand diagram to explain the effect

Draw a supply-and-demand diagram to explain the effect of a negative externality that occurs as a result of a firm’s production process.

Q: In what way does the patent system help society solve an externality

In what way does the patent system help society solve an externality problem?

Q: Give an example of a negative externality and a positive externality.

Give an example of a negative externality and a positive externality. Explain why market outcomes are inefficient in the presence of these externalities.

Q: A glue factory and a steel mill emit smoke containing a chemical

A glue factory and a steel mill emit smoke containing a chemical that is harmful if inhaled in large amounts. Describe three ways the town government might respond to this externality. What are the pr...

Q: Give an example of a private solution to an externality.

Give an example of a private solution to an externality. • What is the Coase theorem? • Why are private economic participants sometimes unable to solve the problems caused by an externality?

Q: Four roommates are planning to spend the weekend in their dorm room

Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: a. Within the dorm r...

Q: Some economists argue that private firms will not undertake the efficient amount

Some economists argue that private firms will not undertake the efficient amount of basic scientific research. a. Explain why this might be so. In your answer, classify basic research in one of the ca...