Class Work
With a aid of a diagram, explain the difference between positive production externalities and positive consumption externalities.
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Question 2 (5 marks) The links between tobacco smoking, passive smoking and lung cancerare well established....
Question 2 (5 marks) The links between tobacco smoking, passive smoking and lung cancerare well established. What are the features of tobacco smoke that imposes externalities? (2 marks) Explain whether these are: positive or negative externalities? (1/2 mark) production or consumption externalities (1/2 mark) In a supply and demand diagram show the deadweight loss associated with tobacco smoke under a scenario where there are externalities (2 marks) please write all the question clearly.
Consider the following examples of externalities and sort them into the appropriate category. The examples are:...
Consider the following examples of externalities and sort them into the appropriate category. The examples are: 1. herd immunity produced when a significant proportion of the population receives vaccinations 2. the development of antibiotic-resistant bacteria from overuse of antibiotics 3. anthropogenic climate change as a result of the raising of livestock (among other causes) 4. an employer providing first-aid classes to its employees to increase workplace safety 5. the construction of a new highway that speeds up travel in a...
Question 3 (total marks for this question = 4) The effectiveness of vaccinations in preventing the...
Question 3 (total marks for this question = 4) The effectiveness of vaccinations in preventing the flu is well established. (a) What are the features of flu vaccine that imposes externalities? (1 mark) (b) Explain whether these are: a. positive or negative externalities? (1/2 mark) b. production or consumption externalities (1/2 mark) (c) In a supply and demand diagram, explain why there will be an underconsumption of flu vaccines without government intervention (2 marks)
4. (10) The Pigouvian Approach to Externalities The following diagram displays a negative consumption externality, smoking....
4. (10) The Pigouvian Approach to Externalities The following diagram displays a negative consumption externality, smoking. Note that, in contrast to the treatment of a negative production externality, the negative consumption externality is treated as causing a divergence between the marginal private benefit (MPB) of a cigarette and its marginal social benefit (MSB). The price on the y- axis is the consumer price. Assume that there are no production externalities, MSC- MPC, and that S-S-S. Recall that the cigarette industry...
4. (10) The Pigouvian Approach to Externalities The following diagram displays a negative consumption externality, smoking....
4. (10) The Pigouvian Approach to Externalities The following diagram displays a negative consumption externality, smoking. Note that, in contrast to the treatment of a negative production externality, the negative consumption externality is treated as causing a divergence between the marginal private benefit (MPB) of a cigarette and its marginal social benefit (MSB). The price on the y- axis is the consumer price. Assume that there are no production externalities, MSC MPC, and that S-$-S. Recall that the cigarette industry...
3. Externalities and second hand smoke a. What externalities are associated with cigarette smokin...
3. Externalities and second hand smoke a. What externalities are associated with cigarette smoking? In particular, i. Are they positive or negative? ii. Are they generated through production or consumption of cigarettes? ii. Provide an example of the monetary social gain or loss from cigarettes? b. Using a supply and demand model of the market for cigarettes, model the effect of externalities i. ii. iii. What is the price and level of consumption in this market, based upon the individual...
(20 Marks) QUESTION With the aid of a fully labelled diagram, draw a Production Possibility Frontier (PPF) for an econo...
(20 Marks) QUESTION With the aid of a fully labelled diagram, draw a Production Possibility Frontier (PPF) for an economy producing computers and pizzas. Use the diagram to explain the concepts of choice, scarcity and opportunity costs. (10 marks) 4.1 2 With reference to the diagram in question 4.1, distinguish between 'efficiency' and 'inefficiency. (4 marks) With the aid of a separate diagram, illustrate and explain what would happen if there was a discovery of an improved technique for producing...
Question 2 130 marks] Suppose that the production function is given by Y 0.5VKv/N. Assume that...
Question 2 130 marks] Suppose that the production function is given by Y 0.5VKv/N. Assume that the size of the population, the labour participation rate and the unemployment rate are all constant. a) Does this production function exhibit constant returns to scale? Explain (5 marks) b) Explain the difference between returns to factors of production and returns to scale (4 marks) cTransform the production function into a relationship between output per worker and capital per worker. (5 marks) d) Assume...
Indicate if the following statement is true or false. Explain your arguments from economic viewpoint “If...
Indicate if the following statement is true or false. Explain your arguments from economic viewpoint “If the production of health care generated positive externalities, the welfare costs of moral hazard would be smaller than those suggested by M. Pauly’s analysis” Pauly's analysis of the welfare effects of moral hazard assumes that consumption of health care does not increase with income, however, empirical evidence suggests it does.
Suppose that the interest rate in Hong Kong increases due to capital movement. Explain with the a...
Suppose that the interest rate in Hong Kong increases due to capital movement. Explain with the aid of a diagram, how the consumption pattern would change under the inter-temporal budget constraint (two-period model). a (12 marks)
Suppose that the interest rate in Hong Kong increases due to capital movement. Explain with the aid of a diagram, how the consumption pattern would change under the inter-temporal budget constraint (two-period model). a (12 marks)
Consider the following examples of externalities and sort them into the appropriate category. The examples are: 1. herd immunity produced when a significant proportion of the population receives vaccinations 2. the development of antibiotic-resistant bacteria from overuse of antibiotics 3. anthropogenic climate change as a result of the raising of livestock (among other causes) 4. an employer providing first-aid classes to its employees to increase workplace safety 5. the construction of a new highway that speeds up travel in a...
Question 3 (total marks for this question = 4) The effectiveness of vaccinations in preventing the flu is well established. (a) What are the features of flu vaccine that imposes externalities? (1 mark) (b) Explain whether these are: a. positive or negative externalities? (1/2 mark) b. production or consumption externalities (1/2 mark) (c) In a supply and demand diagram, explain why there will be an underconsumption of flu vaccines without government intervention (2 marks)
4. (10) The Pigouvian Approach to Externalities The following diagram displays a negative consumption externality, smoking. Note that, in contrast to the treatment of a negative production externality, the negative consumption externality is treated as causing a divergence between the marginal private benefit (MPB) of a cigarette and its marginal social benefit (MSB). The price on the y- axis is the consumer price. Assume that there are no production externalities, MSC- MPC, and that S-S-S. Recall that the cigarette industry...
4. (10) The Pigouvian Approach to Externalities The following diagram displays a negative consumption externality, smoking. Note that, in contrast to the treatment of a negative production externality, the negative consumption externality is treated as causing a divergence between the marginal private benefit (MPB) of a cigarette and its marginal social benefit (MSB). The price on the y- axis is the consumer price. Assume that there are no production externalities, MSC MPC, and that S-$-S. Recall that the cigarette industry...
3. Externalities and second hand smoke a. What externalities are associated with cigarette smoking? In particular, i. Are they positive or negative? ii. Are they generated through production or consumption of cigarettes? ii. Provide an example of the monetary social gain or loss from cigarettes? b. Using a supply and demand model of the market for cigarettes, model the effect of externalities i. ii. iii. What is the price and level of consumption in this market, based upon the individual...
(20 Marks) QUESTION With the aid of a fully labelled diagram, draw a Production Possibility Frontier (PPF) for an economy producing computers and pizzas. Use the diagram to explain the concepts of choice, scarcity and opportunity costs. (10 marks) 4.1 2 With reference to the diagram in question 4.1, distinguish between 'efficiency' and 'inefficiency. (4 marks) With the aid of a separate diagram, illustrate and explain what would happen if there was a discovery of an improved technique for producing...
Question 2 130 marks] Suppose that the production function is given by Y 0.5VKv/N. Assume that the size of the population, the labour participation rate and the unemployment rate are all constant. a) Does this production function exhibit constant returns to scale? Explain (5 marks) b) Explain the difference between returns to factors of production and returns to scale (4 marks) cTransform the production function into a relationship between output per worker and capital per worker. (5 marks) d) Assume...
Suppose that the interest rate in Hong Kong increases due to capital movement. Explain with the aid of a diagram, how the consumption pattern would change under the inter-temporal budget constraint (two-period model). a (12 marks)
Suppose that the interest rate in Hong Kong increases due to capital movement. Explain with the aid of a diagram, how the consumption pattern would change under the inter-temporal budget constraint (two-period model). a (12 marks)
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