Class_16_worksheet

Class_16_worksheet - Economics 101 P. Conway, Fall 2011...

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Economics 101 P. Conway, Fall 2011 In-class worksheet, Class 16 1. A negative externality is a cost of an activity that falls on people other than those who perform the activity. When Fred is in stressful situations, he calms himself by humming songs by Journey. He found his first exam at Carolina pretty stressful, and so decided to hum “Don’t stop believing” throughout the exam – not as loud as he could, but certainly noticeable to those sitting around him. This passes his cost-benefit principle – the benefit of doing so is greater than the cost to him of humming. Is there an externality? If so, how can we measure it? Yes: the people around him get distracted and then real pissed. It can be measured by how much the people next to him would be willing to pay to get him to shut the hell up. 2. Tragedy of the commons is the tendency for a resource that has zero price to be used until its marginal benefit falls to zero. In the not-so-distant past, the Undergrad Library allowed unlimited
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This note was uploaded on 02/13/2012 for the course ECON 101 taught by Professor Balaban during the Fall '07 term at UNC.

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Class_16_worksheet - Economics 101 P. Conway, Fall 2011...

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