Homework_3 - 2. Indicate whether the following are private...

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Extra Credit Homework #3 : Due Thursday October 8, 2009 by the end of class. Directions : All homework answers MUST be TYPED. No EMAIL SUBMISSIONS. The homework is collected in class. If you can’t be in class then send your homework with a friend or turn it in EARLY under my office door labeled with the time your section begins. 1. Indicate whether the following activities create an inframarginal, positive, or negative externality: a. After walking by a fresh bakery you decide to buy a donut. ($100) b. Late-night road construction begins on a new bridge. As a consequence, traffic is rerouted past your house while the construction takes place. ($100) c. A local stream is polluted with acid rock by a small excavating company. ($100) d. A homeowner who backs up on a city park occasionally has to listen to kids playing soccer. ($100) e. A student uses their cell phone discretely during class. ($100)
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Unformatted text preview: 2. Indicate whether the following are private goods, club goods, common resource goods, or public goods: a. A bacon double cheeseburger. ($100) b. A hockey game between the Detroit Red Wings and Boston Bruins. ($100) c. A 4 th of July fireworks show. ($100) d. Swimming pool. ($100) e. Street lights. ($100) 3. Can you think of a reason why making cars safer during accidents would create negative externalities? ($500) (This is your challenge question!) 4. Two roommates are opposites. One enjoys playing Rock Band with his friends all night. The other likes to get to bed early to a get full eight hours of sleep. If Coase is right, the roommates have an incentive to solve the noise externality issue themselves. Name at least two solutions that will internalize, or eliminate, the externality. ($500)...
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This note was uploaded on 10/23/2009 for the course GS 233252 at Pennsylvania State University, University Park.

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