Question 1

The government is contemplating legalizing, and then taxing crack cocaine. Would the government prefer that the demand for crack cocaine be elastic or inelastic? Explain, using supply and demand diagrams.

Accepted Answer

The answer of The government is contemplating legalizing, and then...

Question 2

Consider the following supply and demand diagrams.  (a) Compute the amount of consumer plus producer surplus in each case.
(b) Which outcome would the majority of society prefer? Explain.

Accepted Answer

The answer of Consider the following supply and demand diagrams....

Question 3

The Safety Commissioner for the state of North Dakota is contemplating requiring anyone who applies for a hunting license to take a gun safety class. The state's insurance commissioner has determined that taking this course will reduce the likelihood of a self-inflicted mortality by 1/1,000,000. Recent work by an economist at the University of North Dakota indicates that hunters in North Dakota value their lives at $5,000,000. Since the Safety Commissioner is up for re-election soon, he wants to make sure the cost to hunters of the program is not too high. What price should he charge hunters for this safety class? Why might N.D. offer the course for less than the expected benefit to hunters? Explain.

Accepted Answer

The answer of The Safety Commissioner for the state of...

Quiz 23: Microeconomic Policy, Economic Reasoning, and Beyond

The government is contemplating legalizing, and then taxing crack cocaine. Would the government prefer that the demand for crack cocaine be elastic or inelastic? Explain, using supply and demand diagrams.

Consider the following supply and demand diagrams. (a) Compute the amount of consumer plus producer surplus in each case. (b) Which outcome would the majority of society prefer? Explain.