Chapter 5: Q. a (page 102)
Could negative externalities from drone flights be addressed if it were
possible for people to negotiate prices at which drone owners would pay
explicit fees for the right to fly drones above people's properties?Explain
your reasoning
Yes.
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How might the federal or state governments act to try to boost the external benefits arising from inoculations against the measles virus?
Why do you think that the federal government requires rail operators to mount expensive horns and sound them at prescribed decibel levels at all street crossings?
Suppose that repeated application of a pesticide used on orange trees causes harmful contamination of groundwater. The pesticide is applied annually in almost all of the orange groves throughout the world. Most orange growers regard the pesticide as a key input in their production of oranges.
(a) Use a diagram of the market for the pesticide to illustrate the implications of a failure of orange producers’ costs to reflect the social costs of groundwater contamination.
(b) Use your diagram from part (a) to explain a government policy that might be effective in achieving the amount of orange production that fully reflects
all social costs.
An online video game has the technical capability for a large number of players to participate, as long as the game administrator works to ensure the constant functionality of the game. Adding more players deprives no other participants of the entertainment services provided by the online game. It has been easy, however, to set up a system for excluding participation by anyone who fails to contribute $5 per month to a fund that ensures covering extra expenses generated by that player's participation. Is this game a public good?
A government agency is contemplating launching an effort to expand the scope of its activities. One rationale for doing so is that another government agency might make the same effort and, if successful, receive larger budget allocations in future years. Another rationale for expanding the agency’s activities is that this will make the jobs of its workers more interesting, which may help the government agency attract better-qualified employees. Nevertheless, to broaden its legal mandate, the agency will have to convince more than half of the House of Representatives and the Senate to approve a formal proposal to expand its activities. In addition, to expand its activities, the agency must have the authority to force private companies it does not currently regulate to be officially licensed by agency personnel. Identify which aspects of this problem are similar to those faced by firms that operate in private markets and which aspects are specific to the public sector.
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