Homework 8 Questions and Solutions - Econ 73-100\/Kesten Homework Assignment 8 Solutions 1 Do you agree or disagree with the following statements Why

Homework 8 Questions and Solutions - Econ 73-100/Kesten...

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1 Econ 73-100/Kesten: Homework Assignment 8 Solutions 1. Do you agree or disagree with the following statements? Why? a. "The benefits of corrective taxes as a way to reduce pollution have to be weighed against the deadweight losses that these taxes cause." b. "When deciding whether to levy a corrective tax on consumers or producers, the government should be careful to levy the tax on the side of the market generating the externality." 2. The town of Wiknam has 5 residents whose only activity is producing and consuming fish. They produce fish in two ways. Each person who works on a fish farm raises 2 fish per day. Each person who goes fishing in the town lake catches Xfish per day. Xdepends on N, the number of residents fishing in the lake. In particular, X= 6 –N. Each resident is attracted to the job that pays more fish. a. Why do you suppose that X, the productivity of each fisherman, falls as N, the number of fishermen, rises?
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