Final-Exam-phil-215 - InClassMidterm PHIL215/ARBUS202Ideal...

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In-Class Midterm  PHIL215 / ARBUS202 Ideal  Answers  . The Coase Theorem demonstrates that property rights  eliminate the externality of pollution. What is the conceptual overlap between the First Fundamental Theorem of Welfare  Economics and the Coase Theorem? (Or, in other words,  what work does the First Fundamental Theorem do in the  Coase Theorem?) (125 words max) A perfectly competitive  market cannot exist if there are externalities (like pollution).  Establishing property rights eliminate externalities by  allowing respective parties to negotiate the price of  resources. If the resources in question are owned by  someone, any negotiated price will represent the value of  alternate uses. It does not matter who you give the property  rights to. Give them to somebody, and then allow all parties  to negotiate and market efficiency will emerge. This is what  the First Fundamental Theorem of Welfare Economics tells  us. But markets cannot eliminate something like pollution.  All markets can do is find a socially efficient level of  pollution.  . Describe a scenario where an equal distribution of  resources is inefficient. (75 words max) Bob and Doug are  brothers. Bob likes Hershey Kisses but hates Rolos. Doug  likes Rolos but hates Hershey Kisses. Their mother gives  each of them 3 Hershey Kisses and 2 Rolos. This is an equal distribution of resources, as both boys have the same  amount of candy. It is inefficient, however. It is inefficient 
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because both boys have something they do not want, and  do not have something that they do want. If they do not  trade, there will be wasted resources. (82 words)  . Describe a scenario where an efficient distribution of  resources is unequal. (75 words max) Picking up from Bob  and Doug from the previous question. If Bob and Doug trade Rolos for Hershey Kisses, they will have an efficient  distribution of resources. However, it will be unequal. Bob  will have 6 candies, but Doug will only have 4. (43 words)  . Are equality and efficiency mutually exclusive concepts?  Explain. (75 words max) No they are not. It is possible to  have an efficient distribution of resources which is also  equal. Going back to the example of Bob and Doug, if their  mother had simply given each boy 5 candies from the get- go, things would be equal and they would not feel the need  to trade. Things would be efficient in other words. (61  words)  . If the cloak fits, take it and wear it.  What’s wrong with this  conception of justice? Explain. (125 words max) This goes  back to the story of Cyrus the Great (Week 2). Whether 
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