Question

1. Why do economists oppose attempts to control prices? Why does the government attempt to control prices anyway in a number of markets?

2. Does a binding pricing ceiling cause a shortage or a surplus? Does a non-binding price floor cause a shortage or surplus? Provide an example to support your example for each of the problems above.

3. Does cost-benefit analysis apply to public goods only? If yes, why? If not, name situations in which economists would use cost-benefit analysis.

4. Many cities have noise ordinances that impose especially harsh fines and penalties for early morning and late evening disturbances. Explain why these ordinances exist.

5. Answer Only

Indicate whether the following activities create a positive or negative externality:

a. Late-night road construction begins on a new bridge. As a consequence, traffic is rerouted past your house while the construction takes place.

b. An excavating company pollutes a local stream with acid rock.

c. A homeowner whose property backs up on a city park enjoys the sound of kids playing basketball.

d. A student uses her cell phone discreetly during class.

You and your friends volunteer to plant wild flowers along the local highway.

Answer 1

Answer

As per HomeworkLib policy i have answered first question

why do most economists oppose attempts to control prices?

because it will create deadweight loss in the market as well as create surplus or shortage.

why does the government attempt to control prices anyway, in a number of markets?

Because to prevent consumer or producer from the losses.