Why do governments (city, state, or national) often provide funding for creating and maintaining public parks? What ince
Posted: Wed Jul 06, 2022 5:55 am
Why do governments (city, state, or national) oftenprovide funding for creating and maintaining public parks? Whatincentives may cause businesses to contribute to park funding?
You are an advisor to the mayor of Iola, a lovely little townwith a big problem. Everyone in town drives gas-guzzling Duramax4x4 pickup trucks (duallies with lift kits, naturally), and whenthe price of gasoline rose last year consumers really felt thepain. But now that the gasoline supply is back to normal, the mayorshould be happy that the citizens are able to resume their truckdriving habits. The current daily market for gasoline in Iola isdescribed by the following equations:
Demand: P = 4 –Q Marginal Private Cost: P = 1 + .5 Q
Where P is in dollars per gallon and Q is in 1000s of gallons ofgasoline per day.
Surprisingly, the mayor isn’t completely happy with the newprice of gasoline. “When we were paying $4.50 a gallon, therewas less congestion, less noise, and you could actually ride a bikewithout getting run off the road by a giant truck,” complains themayor. “And besides, the air was cleaner.”
3. What economic concept explains the mayor’s currentunhappiness?
4. Assume that each gallon of gas consumed creates extra costsfor the citizens of Iola in the form of congestion, noise, andpollution. Researchers from Allen Community College have estimatedthat the Marginal Social Cost of the consumption of gasoline isdescribed by the following equation:
Marginal Social Cost: P = 1 + 2 Q
Graph the market. Be sure to fully andclearly label the graph, including the Demand (D), theMarginal Private Cost (MPC), the Marginal Social Cost (MSC), thePrivate Equilibrium Quantity (Qpe), Private EquilibriumPrice (Ppe), the Socially Optimal Price (Ps),the Socially Optimal Quantity (Qs), and the DeadweightLoss (DWL).
5. Based on the graph in question 4, is the current marketprice for gasoline above or below the socially optimal price? Howwill the difference between the market price and the sociallyoptimal price influence the behavior of the citizens of Iola?
You are an advisor to the mayor of Iola, a lovely little townwith a big problem. Everyone in town drives gas-guzzling Duramax4x4 pickup trucks (duallies with lift kits, naturally), and whenthe price of gasoline rose last year consumers really felt thepain. But now that the gasoline supply is back to normal, the mayorshould be happy that the citizens are able to resume their truckdriving habits. The current daily market for gasoline in Iola isdescribed by the following equations:
Demand: P = 4 –Q Marginal Private Cost: P = 1 + .5 Q
Where P is in dollars per gallon and Q is in 1000s of gallons ofgasoline per day.
Surprisingly, the mayor isn’t completely happy with the newprice of gasoline. “When we were paying $4.50 a gallon, therewas less congestion, less noise, and you could actually ride a bikewithout getting run off the road by a giant truck,” complains themayor. “And besides, the air was cleaner.”
3. What economic concept explains the mayor’s currentunhappiness?
4. Assume that each gallon of gas consumed creates extra costsfor the citizens of Iola in the form of congestion, noise, andpollution. Researchers from Allen Community College have estimatedthat the Marginal Social Cost of the consumption of gasoline isdescribed by the following equation:
Marginal Social Cost: P = 1 + 2 Q
Graph the market. Be sure to fully andclearly label the graph, including the Demand (D), theMarginal Private Cost (MPC), the Marginal Social Cost (MSC), thePrivate Equilibrium Quantity (Qpe), Private EquilibriumPrice (Ppe), the Socially Optimal Price (Ps),the Socially Optimal Quantity (Qs), and the DeadweightLoss (DWL).
5. Based on the graph in question 4, is the current marketprice for gasoline above or below the socially optimal price? Howwill the difference between the market price and the sociallyoptimal price influence the behavior of the citizens of Iola?