Principles of Macroeconomics

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University of Wisconsin Department of Economics Economics 101: Principles of Microeconomics Korinna K. Hansen Learning Guide 11 Due Date: Week of Monday, May 7, 2007 Reading Assignment: Case & Fair Chapter 15 up to page 345. Also, all relevant lecture material. Problem Assignment: Objectives: After completing the assignment you should be able to do the following: 1. Define a positive and a negative externality and give examples of externalities in consumption and production. 2. Graph and explain how a negative externality can be internalized with the appropriate level of
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Unformatted text preview: taxes. 3. Graph and explain how a positive externality can be internalized with the appropriate level of subsidy. 4. State Coase's theorem and understand its significance. 5. Define a public good and understand how public goods and their demand and equilibrium quantity differ from private goods. 6. What are some of the most important characteristics of public goods? 7.Given individual demand curves for a public good, you should be able to derive the aggregate demand and discuss the equilibrium quantity and prices both graphically and algebraically....
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