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Question;6. People sometimes argue that imports should be limited by government policy. Suppose a government quota on the quantity of imports causes net exportsto rise. Explain why total expenditures and nationaloutput may rise after the quota is imposed. Who islikely to benefit from the quota? Who will be hurt?7. Suppose the Herfindahl index for domestic productionof televisions is 5,000. Does this imply a verycompetitive or a noncompetitive environment?14. Go to and find the EconomicFreedom map. Use the map to determinethe most economically free continent and the leasteconomically free continent. Then do a search tofind out the real GDP per capita of people in representativecountries of those continents.3. Use the accompanying table to answer thefollowing questions.QuantityPrivate SocialCost Cost Benefit1 $ 2 $ 4 $122 $ 6 $ 10 $223 $ 12 $ 18 $304 $ 20 $ 28 $365 $ 30 $ 40 $40a. What is the external cost per unit of output?b. What level of output will be produced?c. What level of output should be produced toachieve economic efficiency?d. What is the value to society of correcting theexternality?4. What level of tax would be appropriate to internalizethe externality in exercise 3?8. Suppose the following table describes the marginalcosts and marginal benefits of waste (garbage)reduction. What is the optimal amount of garbage?What is the situation if no garbage is allowed to beproduced?Percentage Marginal Costs Marginal BenefitsOf Waste (millions of dollars) (millions of dollars)Eliminated 10% 10 1,00020% 15 50030% 25 10040% 40 5050% 70 2060% 110 570% 200 380% 500 290% 900 1100% 2,000 0


Paper#57172 | Written in 18-Jul-2015

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