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Essentials of Economics 7th Edition by Gregory Mankiw
Edition 7ISBN: 978-1285165950Essentials of Economics 7th Edition by Gregory Mankiw
Edition 7ISBN: 978-1285165950 Exercise 14
Consider the market for fire, extinguishers.
a. Why might fire extinguishers exhibit positive externalities?
b. Draw a graph of the market for fire extinguishers, labeling the demand curve, the social-value curve, the supply curve, and the social-cost curve.
c. Indicate the market equilibrium level of out-put and the efficient level of output. Give an intuitive explanation for why these quantities differ.
d. If the external benefit is $10 per extinguisher, describe a government policy that would result in the efficient outcome.
a. Why might fire extinguishers exhibit positive externalities?
b. Draw a graph of the market for fire extinguishers, labeling the demand curve, the social-value curve, the supply curve, and the social-cost curve.
c. Indicate the market equilibrium level of out-put and the efficient level of output. Give an intuitive explanation for why these quantities differ.
d. If the external benefit is $10 per extinguisher, describe a government policy that would result in the efficient outcome.
Explanation
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a)
Fire distinguisher yields benefits on...
Essentials of Economics 7th Edition by Gregory Mankiw
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