Show that when external benefits are involved, market outputs and prices tend to be too low relative to the socially efficient levels. Use a suitable fully-labelled graph to explain your answer. How would your answer change if external costs were involved instead of external benefits? 2. What impact would a rise in the interest rate have on the intertemporally, efficient rate of today's output? Use a suitable fully-labelled graph to illustrate your answer. 3. Explain what you understand by the following: a. Open access b. Property rights The following table provides data on the number of visitors to an open-access public beach, the individual marginal willingness to pay of the visitors to the beach and the costs per visit to the beach No. of visitors Individual MWTP Cost/visit $20 $15. $20 $15 $20 $20 $1S $18 $14 SIS $12 $1S $10 10 Determine the number of visitors that would maximize the net benefit of the beach b. Under open access, how many people will visit the beach? Use the answers to part (a.) and (b.) to explain the dissipation of rents in this case. 5. Manitoba is considering preserving a very scenic river. The community has 100 people each of whom has a demand given by where q is the number of miles preserved and p is the price per mile she/he is willing to pay for y miles of preserved river. The marginal cost of preserving the river is $500 per mile. a. Draw a full-labelled diagram to depict the problem described above. b. How many miles would be preserved in an efficient allocation? Explain your reasoning. c. Calculate the net benefit of this preservation project? Show this in you diagram. 347 words MacBook Air