436 Problem Set 5 SU17.pdf - Economics 436 Summer 2017...

This preview shows page 1 - 2 out of 2 pages.

Economics 436 Summer 2017 Fifth Problem Set Due July 7 th I. A. What is the definition of economic efficiency? B. Briefly explain why being inefficient is considered undesirable. C. Does this mean that any change that moves the economy from an inefficient situation to an efficient one is desirable? Why or why not? II. A. When is a change considered desirable according to the potential compensation criterion? B. Suppose there is one polluter and one victim. The social marginal utility of income (SMUY) is 1.2 for the polluter and 0.7 for the victim. If a pollution control program would have net benefits of -$300 for the polluter and $400 for the victim, would the following assertions be true or false? Explain why or why not. 1. The project would satisfy the potential compensation criterion. 2. The project would increase social welfare. C. Some people argue that undesirable public facilities tend to be located far too often in poor neighborhoods. Explain why this may be correct,
Image of page 1

Subscribe to view the full document.

Image of page 2

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern