Exam 13: The Environment, Health, and Safety

Consider a police department trying to decide how to allocate its crime prevention resources between motor vehicle thefts and burglaries. The marginal benefit of one less motor vehicle theft is $20,000, and the marginal benefit of one less burglary is $1,000. Suppose the annual number of motor vehicle thefts and the annual number of burglaries depends on the number of detectives assigned to each type of crime, as shown in the table below. Each detective costs $35,000 each per year, regardless of whether the detective is assigned to motor vehicle thefts or burglaries. What is the socially optimal number of detectives to be assigned to each type of crime?

In contrast to first-dollar insurance coverage, one concern about HMOs is that:

Suppose Matt and Gabe must both choose between two jobs, a safe job that pays $250 per week and a risky job that pays $300 per week. The value of safety to each is $75 per week. Having more income than the other is worth $75 per week to each, and having less income than the other means a $75-per-week reduction in satisfaction. Having the same income as the other means no change in satisfaction. The payoff matrix below summarizes this situation. If Gabe and Matt choose their jobs at the same time, then you can predict that:

Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. Process A B C D E (smoke/day) (4 tons/day) (3 tons/day) (2 tons/day) (1 ton/day) (0 tons/day) Cost to Firm X(\ / day) \ 500 \ 514 \ 530 \ 555 \ 585 Cost to Firm Y ( \/ day) \ 400 \ 420 \ 445 \ 480 \ 520 Cost to Firm Z( \/ day) \ 300 \ 325 \ 360 \ 400 \ 550 If pollution is unregulated, then total daily smoke emission will be ______ tons.

Suppose the figure below shows Luke's demand curve for check-ups along with the supply curve for check-ups. If Luke had to pay the entire marginal cost of each check-up, then he would choose to have ­______ check-ups a year.

Suppose that firms that had high rates of injury had to pay more for workers' compensation than did firms with lower rates of injury. This change would:

Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Process A B D D (smoke/day) (10 tons/day) (8 tons/day) (6 tons/day) (4 tons/day) (2 tons/day) Cost to Acme ( \/ day) \ 750 \ 800 \ 1,000 \ 1,400 \ 2,000 Cost to FirmCo ( \/ day) \ 500 \ 750 \ 1,200 \ 2,200 \ 4,000 Suppose the firms are both currently using process A. If the government imposes a tax of $110 per ton of smoke emitted, a total of ______ tons of smoke will be emitted each day, and the total cost to society of this policy will be ______ per day.

Which argument in favor of enacting workplace safety regulations can be justified using economic tools or observation?

Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted. A B C D E Process (smoke/day) (4 tons/day) (3 tons/day) (2 tons/day) (1 tons/day) Cost to Industrio ( \/ day) \ 350 \ 400 \ 500 \ 700 \ 1,000 Cost to Capitalista ( \/ day) \ 225 \ 250 \ 290 \ 400 \6 00 If neither firm had any permits, Industrio would be willing to pay up to ______ for the right to emit 1 ton of smoke, and Capitalista would be willing to pay up to ______ for the right to emit 1 ton of smoke.

The figure below shows the marginal benefit of having a security camera at the library (MB_L), the supermarket (MB_S), and the museum (MB_M). The marginal cost of hiring a security guard is the same at all three places and is given by MC. The optimal number of security cameras is ______ at the library, ______ at the super market, and ______ at the museum.

Prior to World War II most consumers in the United States:

A group of physicians that provides medical services to members for a fixed annual fee is termed a:

Suppose that all workers value a 1 percent reduction in the workplace injury rate at $1,000 per year. The cost of reducing the injury rate by 1 percent is $200 per year for each worker. Firms currently pay $20,000 per year to workers, without any effort to improve safety. If new firms began to offer workers $19,500 and a 1 percent reduction in the injury rate, then the value to each worker of the new firms' offer would be ______ compared to ______ at the existing firms.

A rational public health policy would expand the proportion of the population vaccinated:

Workplace safety laws are ______ in developed countries because _____.

The optimal amount of crime control occurs when:

If fewer families choose to purchase medical insurance because of rising health insurance premiums, then:

If the marginal cost of pollution abatement differs across firms, then regulations that require all polluters to reduce pollution by a fixed proportion will be:

Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. The two policies being considered will result in the same amount of pollution reduction

Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. Process A B C D E (smoke/day) (4 tons/day) (3 tons/day) (2 tons/day) (1 ton/day) (0 tons/day) Cost to Firm X(\ / day) \ 500 \ 514 \ 530 \ 555 \ 585 Cost to Firm Y ( \/ day) \ 400 \ 420 \ 445 \ 480 \ 520 Cost to Firm Z( \/ day) \ 300 \ 325 \ 360 \ 400 \ 550 Suppose the government imposes a tax of $21 on each ton of smoke emitted. To minimize costs, Firm X will emit ______ tons; Firm Y will emit ______ tons, and Firm Z will emit ______ tons.