Discussion on “Consumers, Producers, & Market Efficiency”, and on “Externalities”
1-Explain how buyers’ willingness to pay, consumer surplus, and the demand curve are related.
2- Explain how sellers’ costs, producer surplus, and the supply curve are related.
3- What is efficiency? Do you think it should be the only goal of economic policymakers?
4- Based on your experience and/or observation, give an example of a negative externality and an example of a positive externality, and explain clearly why each is so.
5- Imagine that 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? Why? How do you and your roommate reach this solution?
6- According to you, can problems posed by externalities be solved without government intervention? In what specific ways?