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When you drive a car, you generate several negative externalities: You cause some additional air pollution, you increase the chances that other drivers will have an accident, and you cause some additional congestion on roads, causing other drivers to spend more time in traff ic. Ian Parry of the International Monetary Fund and Kenneth Small […]

According to a news story, Mexico’s soda tax has resulted in a reduction in the sales of sugary drinks by 6 percent. For each bottle of soda drink, the government collects tax from the seller. Briefly explain the effect that the process of soda tax collection in Mexico has on the price of a bottle

Is talking about an economically efficient (sometimes labeled “optimal”) level of pollution paradoxical? Explain. What is the Coase theorem? Why do the parties involved in an externality have an incentive to reach an efficient solution?

Yellowstone National Park is in bear country. The National Park Service, at its Yellowstone Web site, states the following about camping and hiking in bear country: Do not leave packs containing food unattended, even for a few minutes. Allowing a bear to obtain human food even once often results in the bear becoming aggressive about

New York City officials believed they needed more revenue to maintain 35 city-owned recreation centers. To raise the additional revenue, the city’s parks department increased the annual membership fee to use the centers from $75 to $150. According to an article in the New York Times, “the department had hoped to realize $4 million in new

Mario has chosen Virgin Media as his TV and Internetprovider. Subscribing to it allows Mario to get access to content from Sky Sports channels and watch the English Premier League (EPL) football matches. The subscription price to the football premium channels is in addition to the fee paid for the standard Virgin Media package. Mario

Explain the circumstances under which it is advantageous to set up a business as a sole proprietorship. Are those circumstances different from those favoring a corporation set-up? Briefly explain.

Small firms represent a more vital resource for the future growth prospects of an economy than large f irms do. What would you infer from such a statement?

An article discussing the reasons that the Connecticut state legislature passed a general incorporation law observes that prior to the passage of the law, investors were afraid that large businesses “were not a safe bet for their money.” Briefly explain the author’s reasoning.

Unlike in the United States, in Italy many firms employfewer than 10 people. Would this imply that tax exemptions for small businesses are more effective in stimulating the Italian economy than in the United States?