Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

THE ANSWER of qustion 2 is given below but I can not understand the answer. Please clarify the answer for me, thank you 2. Consider

THE ANSWER of qustion 2 is given below but I can not understand the answer. Please clarify the answer for me, thank you

image text in transcribed
2. Consider the market for guns in Australia. Assume that because some of these guns fall into the hands of criminals, there is a negative consumption externality. Illustrate this market on a diagram, and explain the resulting DWLfrom the market outcome. What is a possible government intervention from the government? Under what circumstances would the optimal level of guns traded be zero? Explain. See lecture notes on negative consumption externalities. For zero trade to be optimal the negative consumption externality at q = 0 needs to be at least as large as the gap between the PMB curve and the PMC curve

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

Business Law And The Legal Environment

Authors: Jeffrey F Beatty, Susan S Samuelson

4th Edition

0324303971, 9780324303971

More Books

Students also viewed these Economics questions

Question

Relax your shoulders

Answered: 1 week ago