Suppose there are three consumers—two “hawks” and one “dove.” The dove receives negative benefits from (i.e., is harmed by) national defense, but the hawks value defense. Show graphically how an efficient output of defense is deter-mined in this case.
Answer to relevant QuestionsTokyo’s streets are characterized by a plethora of vending machines—dispensing everything from soft drinks, candy bars, and cigarettes to magazines, personal toiletries, and beer. Unlike in other major cities such as New ...In economics, what do we mean by the term shortage? In unregulated competitive markets, are there ever shortages? Have you ever heard noneconomists use the term shortage with a different meaning? “A decrease in supply will lead to an increase in the price, which decreases demand, thereby lowering price. Thus, a decrease in supply has no effect on the price of a good.” Evaluate this statement.“External costs are bad, and government intervention to reduce them is justified. External benefits, however, are good, and there is no reason for government intervention in this case.” Evaluate these statements.Suppose that in the preceding problem drug producers invent another production process that discharges no waste and can be used at a constant cost of 10.6 cents per dose. a. What will the price and output of the miracle drug ...
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