hw6 - Homework#6 1 Consider the market for leaf-raking...

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Homework #6 1. Consider the market for leaf-raking services in Amherst in October. In- dividuals who rake their lawn (or pay someone else to rake their lawn) create a positive consumption externality by consuming leaf-raking services, because there are then fewer leaves blowing into their neighbors gardens. The Town of Amherst government estimates that, by raking his or her lawn (or hiring some- her neighbors. The following diagram depicts the market for leaf-raking services in Amherst in October. Output (Number of lawns raked per week) price ($/lawn) 50 100 150 10 20 30 40 50 Supply Demand total benefit to society A. What is the market quantity of leaf-raking services per week in Amherst? B. In a free market, what would total surplus be? C. If the town government attempts to use a Pigovian tax/subsidy approach to achieve the social optimum, how would it go about this? D. Explain how the change in total surplus resulting from the government±s
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This note was uploaded on 03/20/2012 for the course ECON 221 taught by Professor Gordanier during the Fall '08 term at South Carolina.

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hw6 - Homework#6 1 Consider the market for leaf-raking...

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