The city council has just approved the construction of a water park in your town, economics homework help

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Consider the following scenario: The city council has just approved the construction of a water park in your town. You are responsible for studying the impact of the new water park on the local economy and the surrounding community.

  • Write a paper of approximately 500 words that addresses the questions below.
    • You know that the water park will increase the traffic flow in the streets around the water park. There are both businesses and neighborhoods adjacent to the increased traffic flow. The cost to the community is estimated to be $6 per person. What kind of externality is this? Why?
  • Graphthe market for water park business, labeling the demand curve, the social-value curve, the market equilibrium level of output, and the efficient level of output.
    • What is the per-unit amount of the externality?
    • You know that the water park will have events in the evening. This will increase both foot traffic and street traffic at night. You believe this will improve the safety of the surrounding businesses, with an estimated benefit of $3 per water park attendee. What kind of externality is this? Why?
  • Create a new graph illustrating the market for water park business for these two externalities. Label the demand curve, the social-value curve, the market equilibrium level of output, and the efficient level of output.
    • What is the per-unit amount of both externalities?
    • Discuss both government and private solutions that would result in an efficient outcome.
  • Format your paper using West Writing Style Handbook guidelines.

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    Explanation & Answer

    Hello, the answer is ready. Thanks a lot.

    Running Head: MARKET EXTERNALITIES

    MARKET EXTERNALITIES
    Name of the Professor
    Institutional Affiliation
    Course Title
    Date

    1

    MARKET EXTERNALITIES

    2

    Part 1
    The externality described above is negative externality. This is because the neighboring people
    will incur costs from increased traffic. It is a negative externality because the firm making the
    construction decision will not have to pay the full amount of the cost to be incurred as a result of
    the decision. Therefore, as a result of the negative externality, the society will incur the greater
    cost as compared to the price paid by the consumers. As we know that consumers make decision
    basing their desire at a point where ...


    Anonymous
    I was having a hard time with this subject, and this was a great help.

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