Externalities

Anonymous

Question Description

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

  • Write a paper of approximately 500 words that addresses all of the questions below. Include the graphs, where indicated:
    • Question 1: You know that the amusement park will increase the traffic flow in the streets around the amusement 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?
    • Graph the market for amusement 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?
    • Question 2. You know that the amusement 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 $2 per park attendee. What kind of externality is this? Why?
    • Question 3 Create a new graph illustrating the market for amusement park business for these two externalities together. 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.

Tutor Answer

EngDuke1993
School: Boston College

Attached.

Running head: EXTERNALITIES ECONOMICS

EXTERNALITIES ECONOMICS
Name:
Institution affiliation:
Date:

1

EXTERNALITIES ECONOMICS

2

QUESTION 1
First, an eternality entails a gain (benefit) or loss(cost) that is incurred by a third party upon
the implementation of a particular program. If the third party benefits, the externality created is
positive while when costs are incurred by the third party, a negative externality results. In this case,
the museum has created a traffic flow cost equivalent to $6 per person. Hence this is a negative
externality. This is because the museum causes a loss or cost to the third party which is the
surrounding community and immediate neighborhood. The cost value is $6 per person
QU...

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Review

Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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