Solution to CHAPTER 2(odd)

Solution to CHAPTER 2(odd) - CHAPTER 2 1. Answers will...

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CHAPTER 2 1. Answers will vary, but should include: (a) the value of alternative uses of time (studying for other classes, leisure). (b) the value of alternative uses of time (studying, other forms of leisure). (c) the value of the other goods and services that could have been purchased with the money used to purchase the car. (d) the value of the goods and services that taxpayers could have purchased with the additional property tax revenue. (e) the value of other goods and services that the governments could have purchased with the money used to purchase the space station, or the value of the goods and services that taxpayers could have purchased with the tax revenue used to finance the space station. (f) the foregone salary that you would have earned and the value of the alternative uses oftime. 3. Opportunity costs of building the bridge include the value of other goods and services that the government of Mallsburg could have purchased with $25 million or the value of the goods and services that taxpayers could have purchased with the tax revenue used to finance the bridge, as well as any inefficiencies created by the income tax by reducing incentives to work. In addition, the construction itself may impose costs delays, noise, and so on and presumably shopkeepers located near the older bridge will lose as consumers shift their business toward the main mall. Benefits of the new bridge include reduced travel time for shoppers and commuting time for workers, increased sales tax revenues for Mallsburg, and gains for shopkeepers located in the main mall. There may be other quality of life costs and benefits that are difficult to sort out without more information. The bridge may have environmental effects that could be positive (less pollution from idling traffic) or negative (depending on where and how the bridge is constructed). Also, there may be effects on the look and lifestyle of the town. A bridge through the center of the town is likely to affect daily living in any number of ways. Beyond the costs and benefits, there is always the question of distribution. Is the income
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This note was uploaded on 10/04/2011 for the course ECO 304K taught by Professor Hickenbottom during the Fall '10 term at University of Texas at Austin.

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Solution to CHAPTER 2(odd) - CHAPTER 2 1. Answers will...

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