Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Macroeconomics Expert

ECONOMICS FOR PUBLIC ADMINISTRATORS PROBLEM

Problem A -

Healthy Candy is located in the City of Atlanta and produces chocolate candies for international consumption. In the course of candy production, Healthy Candy releases pollution as a negative externality into the atmosphere of the City of Atlanta. Some of the pollution-related problems include skin cancer, contamination of drinking water, breathing epidemics, birth defects, and offensive odor. Sadly, Healthy Candy does not do anything to bear the costs associated with the health and ecological problems Atlanta residents suffer. Interestingly, Healthy Candy believes that Atlanta residents do not know about the problems and then leaves Atlanta residents to pay for the health and ecological problems they suffer from the pollution generated in the production of candies. What a rip-off against Atlanta residents!!! Healthy Candy smiles home with huge profits. Healthy Candy's customers worldwide feel satisfied with Healthy Candy's products and organize international events to praise the incredible quality of Healthy Candy's products. Alas, Atlanta residents apparently turn out to be victims in the process of production and consumption of Healthy Candy's products.

Suppose that you are a public administrator in the City Government of Atlanta, have trained in Economics for Public Administrators from Clark Atlanta University, and are working with the following marginal benefits and costs for Healthy Candy's chocolate candies, where Q is thousands of chocolate candy boxes and P is price per chocolate candy box:

MPB (Marginal Private Benefit) = 720 - 0.4Q (benefits to individual Atlanta consumers of Healthy Candy's products).

MPC (Marginal Private Cost) = 40 + 0.3Q (costs of producing candies by Healthy Candy).

MEB (Marginal External Benefit) = 0 (an external benefit is a positive externality: candy production benefits to the City of Atlanta may include a healthy environment and healthy residents in Atlanta. In the current context, external benefits are zero).

MEC (Marginal External Cost) = 0.5Q (an external cost is a negative externality: health and ecological problems associated with the pollution generated by Healthy Candy that affect Atlanta residents and environment).

1. With your understanding of "Lectures 4 and 5 Market Failure and Solution to Market Failure" and the assigned chapters for Lectures 4 and 5,

i. Find the competitive equilibrium, Qc and Pc.

ii. Find the efficient equilibrium, Qe and Pe.

iii. Show (a) the competitive equilibrium and (b) the efficient equilibrium in the same graph that is properly labeled.

2. Suppose that Healthy Candy owns the rights to pollute the atmosphere of the City of Atlanta and is negotiating with concerned public administrators in the City Government of Atlanta to generate less pollution in the production of candies.

i. For the 650th chocolate candy box, determine the range within which a payment would be acceptable to both Healthy Candy and the concerned public administrators. Show in the graph for 1(iii) above (a) the 650th chocolate candy box, (b) the price Healthy Candy would take, and (c) the price the concerned public administrators would pay on behalf of Atlanta residents.

ii. In 200-300 words, clearly explain the price range associated the 650th chocolate candy box.

iii. In 200-300 total words,

a. creatively explain Healthy Candy's chocolate candies as a private good and a public good,

b. skillfully explain pollution from the production of candies as a public good, and

c. critically discuss how pollution from the production of candies can be reduced to a manageable level without government intervention.

Problem B -

Assume that two electricity plants, Firm 1 and Firm 2, release sulfur dioxide (SO2) in Atlanta that exceeds the emissions standard. To meet the standard, 30 units of SO2 must be abated in total. The two firms face the following abatement costs:

MAC1 (Marginal Abatement Cost for Firm 1) = 16 + 0.5A1

MAC2 (Marginal Abatement Cost for Firm 2) = 10 + 2.5A2

where costs are measured in thousands of dollars.

With your knowledge of "Government Intervention or Command and Control Approach" in Lectures 4 and 5 Market Failure and Solution to Market Failure" and on pages 90 to 95 in Chapter 4 in Callan and Thomas on Conventional Solutions to Environmental Problems:

1. (a) Prove that a uniform standard will not meet the cost-effectiveness criterion.

(b) Show your results in a graph that is properly labelled.

(c) In 200-300 words, draw a conclusion on why the uniform standard will not meet the cost-effectiveness criterion.

2. (a) Determine how the abatement levels should be reallocated across the two firms to minimize costs.

(b) Show your results in a separate graph that is properly labeled.

(c) In 200-300 words, draw a conclusion on how the abatement levels should be reallocated across the two firms to minimize costs.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M92501791

Have any Question?


Related Questions in Macroeconomics

Question - what do you predict will happen to the foreign

Question - What do you predict will happen to the foreign exchange rate if interest rates in the United States increase dramatically over the next year? Explain, using a graph of the foreign exchange market. How would su ...

Question president trump has proposed a lowering of the

Question: President Trump has proposed a lowering of the corporate income lax rale from 35% to 15% and the top personal income tax rate from 39.6% to 15%. When lie unveiled the tax plan. Treasury Secretary Steven Mnuchin ...

Quesiton due to low unemployment firms are having tougher

Quesiton: Due to low unemployment, firms are having tougher time to find qualified workers. What will be the slope of aggregate supply curve if a country runs out of qualified workers to hire? The response must be typed, ...

Question please do it by type not pic1 beginning in a state

Question: Please do it by type not pic. 1. Beginning in a state of equilibrium in our consumer equilibrium model (food is situated on the Y-axis and beverage on the X-axis). Graphically illustrate the income and substitu ...

Question suppose that a city operates two neighborhood

Question: Suppose that a city operates two neighborhood schools, one in the rich neighborhood and one in the poor neighborhood. The schools are equal in size and currently have equal budgets. The city receives $10 millio ...

Question - consider a community consisting of three voters

Question - Consider a community consisting of three voters, Al, Bob and Cathy. The Marginal Benefit function for each person is, for lighthouse service G is; MBa = 40 - 4G for Al, MBb = 20 - 2G for Bob, and MBc = 10 - G ...

Question - recall that the long-run world oil demand

Question - Recall that the long-run world oil demand equation is Upper Q equals 41.6 minus 0.12 Upper PQ=41.6-0.12P and the long-run total oil supply equation is Upper Q equals 26.3 plus 0.071 Upper PQ=26.3+0.071P. The l ...

Question - a small island nation is endowed with

Question - A small island nation is endowed with indestructible coconut trees. These trees live forever and no new trees can be planted. Every year $1 million worth of coconuts fall off the trees and can be eaten locally ...

Question - suppose the demand curve for a product is given

Question - Suppose the demand curve for a product is given by Q = 19 - 1P + 2Ps Where P is the price of the product and Ps is the price of a substitute good. The price of the substitute good is $2.40. Suppose P = 0.60. W ...

Question - the cost of tuition at public and private

Question - The cost of tuition at public and private universities has been steadily increasing for many years One New England university pledged to keep undergraduate tuition constant for 4 years for all students who fin ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As