Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Motivation: In 1993, manure runoff from dairy feedlots along rivers contributing to Milwaulsee's water supply was implicated in a Cryptosporidum outbreak in that city, the

image text in transcribed
image text in transcribed
Motivation: In 1993, manure runoff from dairy feedlots along rivers contributing to Milwaulsee's water supply was implicated in a Cryptosporidum outbreak in that city, the nation's largest waterborne disease event to date. Over 400.000 persons fell ill with diarrhea, cramps, fever. and vomiting, and at beast 54 died. Setup: Suppose that the agricultural production of hogs (pigs) ereate water pollution that realts in serious bealth conditions for both humann/animale that rely on those water sources. Specifically, assume that the market supply function is given by H5=6P where H5 is the quantity of hogs supplied to the marlort and P is the market price for hogk. Similarly, assume that the marivet demand function is given by HD=3003P Further, assume that hog production imposes fotal external medical costs (MI) on nearby communities, quantified as M=2H where M is measured in dollars and H is the number of hogs produced. (a) (2 Points) Identify the relevant externality (consumer/producer, positiveegative). (b) (5 Points) Sioetch the market for hog production and identify the corresponding DWL in the marliet resulting from the externality ideatified in part (a), (Do not caleulate.) (c) Suppose that property rights to clean drinking water ate assigned to the neighboring communities. Further assume that hog production is common on numerous small farms in the area. (i) (3 Points) Briefly discuss the potential Coasian outcome. (ii) (2. Points) Determine whether or not the private market solution is likely to succeed in this context. (d) Concerned about the outbreaks of waterborne disease, the federal government decides to intervene in the hog market. (i) (4 Points) if imposing a price control, what corrective Pigouvian tax r in the hog market will lead to the socially optimal level of hog production? (ii) (4 Points) If instead imposing a quantity control, what production cap Hmarin the hog market will lead to the socially optimal level of hog production? Motivation: In 1993, manure runoff from dairy feedlots along rivers contributing to Milwaulsee's water supply was implicated in a Cryptosporidum outbreak in that city, the nation's largest waterborne disease event to date. Over 400.000 persons fell ill with diarrhea, cramps, fever. and vomiting, and at beast 54 died. Setup: Suppose that the agricultural production of hogs (pigs) ereate water pollution that realts in serious bealth conditions for both humann/animale that rely on those water sources. Specifically, assume that the market supply function is given by H5=6P where H5 is the quantity of hogs supplied to the marlort and P is the market price for hogk. Similarly, assume that the marivet demand function is given by HD=3003P Further, assume that hog production imposes fotal external medical costs (MI) on nearby communities, quantified as M=2H where M is measured in dollars and H is the number of hogs produced. (a) (2 Points) Identify the relevant externality (consumer/producer, positiveegative). (b) (5 Points) Sioetch the market for hog production and identify the corresponding DWL in the marliet resulting from the externality ideatified in part (a), (Do not caleulate.) (c) Suppose that property rights to clean drinking water ate assigned to the neighboring communities. Further assume that hog production is common on numerous small farms in the area. (i) (3 Points) Briefly discuss the potential Coasian outcome. (ii) (2. Points) Determine whether or not the private market solution is likely to succeed in this context. (d) Concerned about the outbreaks of waterborne disease, the federal government decides to intervene in the hog market. (i) (4 Points) if imposing a price control, what corrective Pigouvian tax r in the hog market will lead to the socially optimal level of hog production? (ii) (4 Points) If instead imposing a quantity control, what production cap Hmarin the hog market will lead to the socially optimal level of hog production? Motivation: In 1993, manure runoff from dairy feedlots along rivers contributing to Milwaulsee's water supply was implicated in a Cryptosporidum outbreak in that city, the nation's largest waterborne disease event to date. Over 400.000 persons fell ill with diarrhea, cramps, fever. and vomiting, and at beast 54 died. Setup: Suppose that the agricultural production of hogs (pigs) ereate water pollution that realts in serious bealth conditions for both humann/animale that rely on those water sources. Specifically, assume that the market supply function is given by H5=6P where H5 is the quantity of hogs supplied to the marlort and P is the market price for hogk. Similarly, assume that the marivet demand function is given by HD=3003P Further, assume that hog production imposes fotal external medical costs (MI) on nearby communities, quantified as M=2H where M is measured in dollars and H is the number of hogs produced. (a) (2 Points) Identify the relevant externality (consumer/producer, positiveegative). (b) (5 Points) Sioetch the market for hog production and identify the corresponding DWL in the marliet resulting from the externality ideatified in part (a), (Do not caleulate.) (c) Suppose that property rights to clean drinking water ate assigned to the neighboring communities. Further assume that hog production is common on numerous small farms in the area. (i) (3 Points) Briefly discuss the potential Coasian outcome. (ii) (2. Points) Determine whether or not the private market solution is likely to succeed in this context. (d) Concerned about the outbreaks of waterborne disease, the federal government decides to intervene in the hog market. (i) (4 Points) if imposing a price control, what corrective Pigouvian tax r in the hog market will lead to the socially optimal level of hog production? (ii) (4 Points) If instead imposing a quantity control, what production cap Hmarin the hog market will lead to the socially optimal level of hog production? Motivation: In 1993, manure runoff from dairy feedlots along rivers contributing to Milwaulsee's water supply was implicated in a Cryptosporidum outbreak in that city, the nation's largest waterborne disease event to date. Over 400.000 persons fell ill with diarrhea, cramps, fever. and vomiting, and at beast 54 died. Setup: Suppose that the agricultural production of hogs (pigs) ereate water pollution that realts in serious bealth conditions for both humann/animale that rely on those water sources. Specifically, assume that the market supply function is given by H5=6P where H5 is the quantity of hogs supplied to the marlort and P is the market price for hogk. Similarly, assume that the marivet demand function is given by HD=3003P Further, assume that hog production imposes fotal external medical costs (MI) on nearby communities, quantified as M=2H where M is measured in dollars and H is the number of hogs produced. (a) (2 Points) Identify the relevant externality (consumer/producer, positiveegative). (b) (5 Points) Sioetch the market for hog production and identify the corresponding DWL in the marliet resulting from the externality ideatified in part (a), (Do not caleulate.) (c) Suppose that property rights to clean drinking water ate assigned to the neighboring communities. Further assume that hog production is common on numerous small farms in the area. (i) (3 Points) Briefly discuss the potential Coasian outcome. (ii) (2. Points) Determine whether or not the private market solution is likely to succeed in this context. (d) Concerned about the outbreaks of waterborne disease, the federal government decides to intervene in the hog market. (i) (4 Points) if imposing a price control, what corrective Pigouvian tax r in the hog market will lead to the socially optimal level of hog production? (ii) (4 Points) If instead imposing a quantity control, what production cap Hmarin the hog market will lead to the socially optimal level of hog production

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Project Finance In Theory And Practice

Authors: Stefano Gatti

3rd Edition

0128114010, 978-0128114018

More Books

Students also viewed these Finance questions

Question

1. How might volunteering help the employer and the employee?

Answered: 1 week ago