Tutorial 11 (Ch10) Team C Ch.10 Externalities Problems and Applications: 6 and 14 (Textbook) Supplementary Questions: 1 and 2 Supplementary Questions 1. A Disney Park is proposed to be built in your district. The government completes a study of the impact of the Disney Park on the surrounding community. a.) One finding of the study is that Disney Park increases traffic, which adversely affects the community. It is estimates that the cost to the community from the extra traffic is $5per ticket. What kind of an externality is this? Why? b.) Afterwards, the government found another externality. Since the Disney Park will operate until late at night. The planner has found that the increased foot traffic improves the safety of the surrounding streets, an estimated benefit to the community of $2 per ticket. What kind of externality is this? Why? c.) On a new graph, illustrate the market for Disney Park in the case of these two externalities. Again, label the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output, the efficient level of output, and the per-unit amount of both externalities. I d) Suggest a government policy that would result in an efficient outcome. 2. Describe the Coase theorem. Assuming you are a nonsmoker sharing a room with a smoker. According to the Coase theorem, what determines whether your roommate smokes in the room? Is this outcome efficient? How do you and your roommate reach this solution