Part I: For questions In this section, first determine whether you agree or disagree with the statement and then provide an explanation for your answer. (4 points each x It/ =40 points;
I. The tens market failure refers to a situation in which competition among firms becomes nithless. 2. Government output is hard to account for because most often government keeps secrets about what it produces. 3. The local government is the largest taxing entity in Canada. 4. In Canada, all levels of goverrunents - federal. provincial and local - receive the largest amount of revenue from perumal income taxes. 5. "Fret riding" is a characteristics of a good that Is both rival and excludable. 6. Inn direct democracy, politicians are the people who enjoy the benefits of a public good without contributing towards the cost of producing the good. 7. The government provides public goods because private markets would not pnxluce any of the good. 8. Research into new technologies results in negative externalities because government funding for research causes less government spending in other areas. 9. Marginal damages are hard to measure because they only occur over a long period of time. 10. Internalizing a negative externality will cause an industry to increase the quantity it supplies to the market and increase the price of the good produced.
I. What is government? What arc the two views of government? ubscribei Why? Which view do you 2. Discuss briefly at least four causes of the government growth with special reference to Canada. 3. Answer the following questions regarding Parcto Efficiency:
a. What do you understand b. What is the condition of words its meaning. c. What is the condition of words its meaning. il. %That is the condition of words its meaning.
if an allocation of resource is Pardo Efficient? Pareto efficiency in a pure exchange economy? Explain in Parcto efficiency in o productioneconoiny? Explain in Pareto efficiency in the pmvision of public good? Explain in
Which of the following do you consider pure public goods? Private goods? Why? a- Highways It Lighthouse c. Swimming pool d. Free fitness classes offered at the GIX
What is is negative externality'? Explain why a negative externality results in a misallocation of resources. Use graph to support your answer.
A beekeeper lives adjacent to a 45-acre apple orchard. The orchard owner benefits from the bees because each hive pollinates about 1/2 acre of apple trees. The orchard owner pays nothing for this service, however. because the bees come to the orchard without his having to do anything. There arc not enough bees to pollinate the entire orchard, and the orchard owner must complete the pollination by artificial means. at a cost of S25 pa acre of trees.
Suppose that the beekeeper's marginal cost is given by MC = 30 + 0.5Q, where Q is the number of beehives. Further suppose that the market value of the honey from one hive is 550.
a. In the absence of any bargaining, how many beehives will the beektxper maintain and what portion of the apple orchard will be pollinated? b. What is the socially optimal level of beehives? c. What do you conclude?