Consider a society where people throw garbage on the streets. A person who does so inflicts negative externalities on others: suppose that the (psychic) dollar cost to any one person is an, where a > 0 is a positive constant and n is the number of (other) people who throw garbage on the streets. Assume that your own act of throwing garbage on the street gives you a (psychic) dollar "convenience gain" of G, (because you don't have to wait for the next trash can) and a (psychic) dollar "shame loss" of c, where c > 0 and n, again, is the number of other garbage throwers (the idea is that the shame is smaller the more the number of other garbage throwers).

(a) Show that nobody throwing garbage on the streets is always an equilibrium in this example.

(b) Show that there is a threshold population size such that if population exceeds this threshold, everybody throwing garbage on the streets is also an equilibrium. Why is the threshold dependent on the parameters G and c, but independent of a? Explain intuitively. (c) Starting from a situation where everybody is throwing garbage on the streets, assess the chances of moving to the good equilibrium of part (a) overnight. Why do you consider such a move unlikely?

(d) Consider a policy that imposes a fine F > 0 on every garbage thrower. Show that the threshold population required to support the bad equilibrium must rise with the fine.

(e) Suppose that the fine is such that the actual population falls below the threshold. In this case, discuss why the fine policy may be removed after a few years with a permanent change implemented in social norms.

MGMT 2032 Managerial Economics Practice Quiz ANSWER ALL QUESTIONS. TIME: 1.5 HOURS Questions 1 to 5 are based on the following information: Price Quantity Demanded 10 20 5 50 1. Derive the demand function using the above information.Part one Answer this first question. Using the information and skills learned this semester that surround Law and Economics apply those skills to the current economic and legal situation in China.. Answer two of the following questions, each of the questions has an obvious answer-but the most points go to answers that go beyond the obvious and demonstratea broad understanding of course readings, lectures, and concepts." 1. What are the two strains of thought in Law and Economics? Which do you believe to be correct? Why?. 2. What is Law and Economics? Why do we study it? How is it different than either law or economics?. 3. Trace the basic structure of the US Legal System. How does that structure influence your understanding of Law and Economics. 4. What are Social Norms and How do they impact Law?.Porientation Slides - Infred X FCON1 000 52 2019 Boston. R Lawobeswebdaw/pid-7126319-d1-content-nid-38231775_1/courses/2019 2_ECON1000_V1 1127 41_INT_679950/ECON10001420526202019%620Review-620342 25 Section B. Key Points: Behavioural Economics and Asymmetric Information [L5. Ch.5] Behavioural Economics How does behavioural economics differ to traditional economics? What are some examples of choice decisions under behavioural economics? Externalities What are the different types of externalities? - What is the difference between a negative & positive externality? Why does the market fail, and how can the government intervene to solve the 'market failure" Public goods // Common Resources non-rival & non-excludable // rival & non-excludable - the free rider problem // the tragedy of the commons Asymmetric Information in specific markets: e.g. car, insurance and/ or financial (credit) markets - Adverse Selection definition . examples Moral Hazard . definition examples Section B. Sample (part of a) Question and 3 Answers [ Behavioural Economics and mistakes we can make. 15. Ch. 51 90 Prison Home End TW FGQuestion 10 The informal term for that economic theory which argues that the Not yet market supplies all the information producers and customers need answered to make a sound economic decision is called Marked out of 100 Select one: Flag O a. Voodoo Economics. estion O b. supply side economics. O c. Keynesian economics. O d. Laissez-faire.Which of the production possibility information shown in the tables below embodies the principle of rising trade-off? History Economics 40 100 60 90 80 70 History Economics 40 100 60 80 80 60 C History Economics 40 100 60 80 80 70 History Economics 40 70 60 90 80 100