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ECC1000 - Principles of microeconomics - S2 2025

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Read the following statements about Pigouvian taxation and select the correct option(s).

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Smoking just outside of the LTB  produces a negative externality to all non-smokers passing by the area. To account for this, Monash is considering to tax each student per cigarette smoked by exactly the same amount of the externality created. If this happens:

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Take a moment to think and jot down any questions you have about the final exam or anything else for the remainder of the semester. 

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Plymouth has 1,000 residents. Each of the residents has the same individual marginal benefit per traffic light.

Without government intervention, the town will have traffic lights. [Enter only the number, with no additional words or symbols.]

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When Joe watched a television movie, his viewing was _____ in consumption because other people ______ able to view the movie at the same time Joe did.

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Enter only the number for the answer, with no additional words or symbols: if the government provides traffic lights, the socially efficient quantity is:

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If the market produces an efficient level of a good, then we know that the good must be ______ and _______ in consumption

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No individual is willing to pay to provide the efficient level of a public good, since the:

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If the town’s population doubles and the new residents share the identical individual marginal benefit of the existing residents, the socially efficient quantity of traffic lights will:

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Consider our example with the banana plantation producers using pesticides that then run off into rivers, affecting fishermen fishing in those rivers:

The above figure was for when the plantation owners had property rights. 

Instead of assigning property rights to the plantation owners, suppose that the Government gives the right to clean water to the fishermen. If bargaining is successful who will be paying whom?

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