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《微观经济学》考研清华大学2021考研真题微观经济学是一门研究个体经济单位行为以及这些单位如何在市场中相互作用的学科。
它关注的是消费者的选择、生产者的决策、市场结构以及资源配置等问题。
对于报考清华大学经济学相关专业的考生来说，深入理解和掌握微观经济学的知识，并能够熟练运用这些知识解决实际问题，是考研成功的关键之一。
以下是对清华大学 2021 年微观经济学考研真题的一些分析和解答。
一、消费者理论消费者理论是微观经济学的基础之一，主要研究消费者如何在收入和价格的约束下做出最优的消费决策。
在 2021 年的真题中，有这样一道题目：假设消费者的效用函数为 U(X,Y) ＝ X^（1/2) Y^（1/2)，收入为 M，商品 X 和 Y 的价格分别为 Px 和 Py。
求消费者的最优消费组合。
解答这道题，首先需要根据消费者的预算约束方程 M ＝ Px X ＋Py Y，构建拉格朗日函数 L ＝ X^（1/2) Y^（1/2) ＋λ(M Px X Py Y)。
然后分别对 X、Y 和λ 求偏导，并令偏导数等于 0，得到以下方程组：（1/2) X^（－1/2) Y^（1/2) λ P x ＝ 0（1/2) X^（1/2) Y^（－1/2) λ Py ＝ 0M Px X Py Y ＝ 0解这个方程组，可以得到消费者的最优消费组合为 X ＝ M Py ／（Px ＋ Py)，Y ＝ M Px ／（Px ＋ Py)。
这道题考查了消费者效用最大化的基本原理和求解方法，需要考生熟练掌握拉格朗日乘数法，并能够进行准确的计算。
二、生产者理论生产者理论主要研究企业如何在成本和生产技术的约束下做出最优的生产决策。
真题中有这样一道关于生产者理论的题目：某企业的生产函数为 Q ＝ L^（1/2) K^（1/2)，劳动的价格为 w，资本的价格为 r，总成本为 C。
求企业的最优生产要素组合和产量。
首先，根据成本约束方程 C ＝ w L ＋ r K，构建拉格朗日函数 L ＝ L^（1/2) K^（1/2) ＋λ(C w L r K)。
平新乔《微观经济学十八讲》第5讲 风险规避、风险投资与跨期决策跨考网独家整理最全经济学考研真题，经济学考研课后习题解析资料库，您可以在这里查阅历年经济学考研真题，经济学考研课后习题，经济学考研参考书等内容，更有跨考考研历年辅导的经济学学哥学姐的经济学考研经验，从前辈中获得的经验对初学者来说是宝贵的财富，这或许能帮你少走弯路，躲开一些陷阱。
以下内容为跨考网独家整理，如您还需更多考研资料，可选择经济学一对一在线咨询进行咨询。
1．一个农民认为在下一个播种的季节里，雨水不正常的可能性是一半对一半。
他的预期效用函数的形式为：预期效用11ln ln 22NR R y y =+这里，NR y 与R y 分别代表农民在“正常降雨”与“多雨”情况下的收入。
（1）假定农民一定要在两种如表5-1所示收入前景的谷物中进行选择的话，会种哪种谷物？表5-1 小麦和谷子在不同天气状况下的收入 单位：元（2）假定农民在他的土地上可以每种作物都播种一半的话，他还会选择这样做吗？请解释你的结论。
（3）怎样组合小麦与谷子才可以给这个农民带来最大的预期效用？（4）如果对于只种小麦的农民，有一种要花费4000元的保险，在种植季节多雨的情况下会赔付8000元，那么，这种有关小麦种植的保险会怎样改变农民的种植情况？解：（1）农民种小麦的预期效用()w E u 为：()()60.5ln 280000.5ln100000.5ln 28010w E u =+=⨯农民种谷子的预期效用()c E u 为：()()60.5ln190000.5ln150000.5ln 28510c E u =+=⨯因为()()w c E u E u <，所以农民会种谷子。
（2）若农民在土地上每种作物都播种一半，他不会选择继续只种谷子。
如果农民在他的土地上每种作物各种一半，他的收益如表5-2所示：表5-2 混合种植时不同天气状况下的收入 单位：元从而他的预期效用()E u 为：()()60.5ln 235000.5ln125000.5ln 293.7510E u =+=⨯由于()()()w c E u E u E u <<，所以农民会混合种植。
CHAPTER 18UNCERTAINTY AND RISK AVERSIONMost of the problems in this chapter focus on illustrating the concept of risk aversion. That is, they assume that individuals have concave utility of wealth functions and therefore dislike variance in their wealth. A difficulty with this focus is that, in general, students will not have been exposed to the statistical concepts of a random variable and its moments (mean, variance, etc.). Most of the problems here do not assume such knowledge, but the Extensions do show how understanding statistical concepts is crucial to reading applications on this topic.Comments on Problems18.1 Reverses the risk-aversion logic to show that observed behavior can be used to placebounds on subjective probability estimates.18.2 This problem provides a graphical introduction to the idea of risk-taking behavior. TheFriedman-Savage analysis of coexisting insurance purchases and gambling could bepresented here.18.3 This is a nice, homey problem about diversification. Can be done graphically althoughinstructors could introduce variances into the problem if desired.18.4 A graphical introduction to the economics of health insurance that examines cost-sharingprovisions. The problem is extended in Problem 19.3.18.5 Problem provides some simple numerical calculations involving risk aversion andinsurance. The problem is extended to consider moral hazard in Problem 19.2.18.6 This is a rather difficult problem as written. It can be simplified by using a particularutility function (e.g., U(W) = ln W). With the logarithmic utility function, one cannot use the Taylor approximation until after differentiation, however. If the approximation isapplied before differentiation, concavity (and risk aversion) is lost. This problem can,with specific numbers, also be done graphically, if desired. The notion that fines aremore effective can be contrasted with the criminologist’s view that apprehension of law-breakers is more effective and some shortcomings of the economic argument (i.e., nodisutility from apprehension) might be mentioned.18.7 This is another illustration of diversification. Also shows how insurance provisions canaffect diversification.18.8 This problem stresses the close connection between the relative risk-aversion parameterand the elasticity of substitution. It is a good problem for building an intuitive9798 Solutions Manualunderstanding of risk-aversion in the state preference model. Part d uses the CRRAutility function to examine the “equity-premium puzzle.”18.9 Provides an illustration of investment theory in the state preference framework.18.10 A continuation of Problem 18.9 that analyzes the effect of taxation on risk-takingbehavior.Solutions18.1 p must be large enough so that expected utility with bet is greater than or equal to thatwithout bet: p ln(1,100,000) + (1 –p)ln(900,000) > ln(1,000,000)13.9108p +13.7102(1 –p) > 13.8155, .2006p > .1053 p > .52518.2This would be limited by the individual’s resources: he or she could run out of wealth since unfair bets are continually being accepted.18.3 a.Strategy One Outcome Probability12 Eggs .50 Eggs .5Expected Value = .5∙12 + .5∙0 = 6Strategy Two Outcome Probability12 Eggs .256 Eggs .50 Eggs .25Expected Value = .25 ∙12 + .5 ∙ 6 + .25∙ 0= 3 + 3 = 6Chapter 18/Uncertainty and Risk Aversion 99b.18.4 a. E(L) = .50(10,000) = $5,000, soWealth = $15,000 with insurance, $10,000 or $20,000 without.b. Cost of policy is .5(5000) = 2500. Hence, wealth is 17,500 with no illness, 12,500with the illness.18.5 a. E(U) = .75ln(10,000) + .25ln(9,000) = 9.1840b. E(U) = ln(9,750) = 9.1850 Insurance is preferable.c. ln(10,000 – p ) = 9.184010,000 – p = e 9.1840 = 9,740p = 26018.6 Expected utility = pU(W – f) + (1 – p)U(W). ,[()()]/U p U pU W f U W p U e p U∂=⋅=--⋅∂,()/U f U fp U W f f U e f U∂'=⋅=-⋅-⋅∂100 Solutions Manual,,()()1()U p U fU W f U W e f U W f e --=<'-- by Taylor expansion,So, fine is more effective.If U (W ) = ln W then Expected Utility = p ln (W – f ) + (1 – p ) ln W .,/[ln ()ln ]U pp p f WW f W e U U -=--⋅≈ ,/()/()U ff p f W f p U W f e U U--=--⋅= ,,1U p U fW fe W e -=<18.7 a. U (wheat) = .5 ln(28,000) + .5 ln(10,000) = 9.7251 U (corn) = .5 ln(19,000) + .5 ln(15,000) = 9.7340 Plant corn. b. With half in eachY NR = 23,500Y R = 12,500U = .5 ln(23,500) + .5 ln(12,500) = 9.7491Should plant a mixed crop. Diversification yields an increased variance relative to corn only, but takes advantage of wheat’s high yield.c. Let α = percent in wheat. U = .5 ln[ (28,000) + (1 – α )(19,000)] + .5 ln[α (10,000) + (1 – α )(15,000)] = .5 ln(19,000 + 9,000α) + .5 ln(15,000 – 5,000α)45002500019,0009,00015,0005,000dU d ααα=-=+- 45(150 – 50α) = 25(190 + 90α) α = .444 U = .5 ln(22,996) + .5 ln(12,780) = 9.7494. This is a slight improvement over the 50-50 mix. d. If the farmer plants only wheat,Y NR = 24,000Y R = 14,000U = .5 ln(24,000) + .5 ln(14,000) = 9.8163so availability of this insurance will cause the farmer to forego diversification.Chapter 18/Uncertainty and Risk Aversion 10118.8 a. A high value for 1 – R implies a low elasticity of substitution between states of theworld. A very risk-averse individual is not willing to make trades away from the certainty line except at very favorable terms.b. R = 1 implies the individual is risk-neutral. The elasticity of substitution between wealth in various states of the world is infinite. Indifference curves are linear with slopes of –1. If R =-∞, then the individual has an infinite relative risk-aversion parameter. His or her indifference curves are L-shaped implying an unwillingness to trade away from the certainty line at any price.c. A rise in b p rotates the budget constraint counterclockwise about the W g intercept. Both substitution and income effects cause W b to fall. There is a substitution effect favoring an increase in W g but an income effect favoring a decline. The substitution effect will be larger the larger is the elasticity of substitution between states (the smaller is the degree of risk-aversion).d. i. Need to find R that solves the equation:R R R W W W )955.0(5.0)055.1(5.0)(000+=This yields an approximate value for R of –3, a number consistent with some empirical studies.ii. A 2 percent premium roughly compensates for a ±10 percent gamble. That is:303030)12.1()92(.)(---+≈W W W .The “puzzle” is that the premium rate of return provided by equities seems to be much higher than this.18.9 a. See graph.Risk free option is R , risk option is R '. b. Locus RR' represents mixed portfolios.c. Risk-aversion as represented by curvature of indifference curves will determine equilibrium in RR' (say E ).102 Solutions Manuald. With constant relative risk-aversion, indifference curve map is homothetic so locus ofoptimal points for changing values of W will be along OE.18.10 a. Because of homothetic indifference map, a wealth tax will cause movement along OE(see Problem 18.9).b. A tax on risk-free assets shifts R inward to Rt (see figure below). A flatter RR t'provides incentives to increase proportion of wealth held in risk assets, especially for individuals with lower relative risk-aversion parameters. Still, as the “note” implies, it is important to differentiate between the after tax optimum and the before taxchoices that yield that optimum. In the figure below, the no-tax choice is E on RR'.* EW represents the locus of points along which the fraction of wealth held in risky assets is constant. With the constraint RR t' choices are even more likely to be to the right of EW* implying greater investment in risky assets.c. With a tax on both assets, budget constraint shifts in a parallel way to RR tt'. Even in this case (with constant relative risk aversion) the proportion of wealth devoted to risky assets will increase since the new optimum will lie along OE whereas a constant proportion of risky asset holding lies along EW O.103。
/portalweb/appmanager/portal/semTSINGHUA UNIVERSITYSCHOOL OF ECONOMICS AND MANAGEMENT中级微观经济学2004年秋季学期Intermediate MicroeconomicsFall Semester 2004星期三Wednesday9:50 am —12:15pm六教 6A018任课教师:清华大学经济管理学院教授李稻葵Professor David D. Li助教:姜超, 冯俊新，江红平，梅松课程网页Course Web-Page:→分类讨论→中级微观经济学用户名: s311 密码：pe4028联系方式:李稻葵E-mail: lidk@电话: 6277-2126;办公室: 舜德楼南211H答疑时间: 预约姜超S972260@ 冯俊新fengjx@江宏平jianghp@ 梅松meis@习题课以及答疑时间: 星期一 & 星期二Monday & Tuesday19:00 pm —21:00 pm伟伦楼北5081.课程简介微观经济学是现代经济学的基础. 其核心理论体系之完美, 可以和物理学的牛顿力学相媲美; 其主要研究方法广泛应用于经济学的各个分支; 其思维方式,渗透了现代社会科学的主要学科. 本课程的目的就是给学生打下一个扎实的微观经济学基础, 欣赏其理论之完美和独特的思维方式, 并熟练地掌握微观经济学系统的分析工具.2.教学风格本课程属于经济学核心课程, 力求与国际最高标准接轨. 教学的文字材料(包括教材, 讲稿, 习题和考试等), 以英文为主; 口头表达以汉语为主.3.教材教材为:Hal R. Varian: Intermediate Microeconomics A Modern Approach. Sixth Edition W.W. Norton & Company. New York, NY. 2003.习题来自其附本:Theodore C. Bergstrom and Hal R. Varian: Workouts in Intermediate Microeconomics. Sixth Edition W.W. Norton & Company. New York, NY. 2003.4.习题课对大多数同学而言, 参加习题课是学好本课程的关键. 习题课上还会布置随堂习题, 成绩计入总成绩. 如果有的同学感到可以比较轻松地完全掌握教学内容, 可以选择不参加少量习题课和部分随堂习题, 不会影响总成绩, 总成绩地计算办法见下.除第一周和国庆节长周末之外, 每周将安排两节内容相同但时间不同的习题课, 大家可以任选其一参加. 具体时间另行通知.5.课程要求及考核标准微观经济学的特点是思想性与方法性并重, 要学好这门课, 学生们一定要下功夫彻底理解基本概念和基本原理, 不仅懂, 而且会讲,会用, 然后练习解题. 解题时要举一反三, 多动脑筋总结经验.根据微观经济学的这些特点, 本课程采取以下考核方式:1)随堂习题 (比重 20%) : 在习题课上进行. 题目来自Theodore C.Bergstrom and Hal R. Varian: Workouts in Intermediate MicroeconomicsSixth Edition W.W. Norton & Company. New York, NY. 2003.随堂习题的目的是鼓励学生在课下做习题, 多练习.随堂习题的总成绩是每人8个最高的随堂习题的平均值.2)期中考试 (比重 30%): 题目也将与上述习题集有关.3)期末考试 (比重 50%): 按清华大学的给定时间进行.Class ScheduleNote:Chapters refer to Hal R. Varian: Intermediate Microeconomics AModern Approach. Sixth Edition W.W. Norton & Company. New York, NY. 2003.September 15 Introduction and Overview of the CourseChapter 1 The MarketChapter 2 Budget ConstraintSeptember 22 Chapter 3 PreferencesChapter 4 UtilityChapter 5 ChoiceSeptember 29 Chapter 6 DemandChapter 7 Revealed PreferenceOctober 6 (No Class --- National Day Long Weekend)October 13Chapter 8 Slutsky EquationChapter 9 Buying and sellingOctober 20 Chapter 10 Intertemporal ChoiceChapter 11 Asset MarketsChapter 12 UncertaintyChapter 13 Risky AssetsOctober 27 Chapter 14 Consumer’s SurplusChapter 15 Market DemandChapter 16 EquilibriumNovember 3 Mid-Term ExamNovember 10Chapter 18 TechnologyChapter 19 Profit MaximizationChapter 20 Cost MinimizationNovember 17Chapter 21 Cost CurvesChapter 22 Firm SupplyChapter 23 Industry Supply November 24Chapter 24 MonopolyChapter 25 Monopoly BehaviorChapter 26 Factor Markets December 1 Chapter 27 OligopolyChapter 28 Game Theory December 8 Chapter 30 ExchangeChapter 31 ProductionDecember 15 Chapter 32 WelfareChapter 33 ExternalitiesChapter 35 Public Goods December 22 Chapter 36 Asymmetric InformationChapter 17 AuctionsDecember 29 Course Integration任课教师简介李稻葵(David D. Li) 1985年毕业于清华大学经济管理学院管理信息系统专业,同年由学院推荐参加国家教委组织的留美经济学考试(即, 邹至庄经济学留学计划),出国留学. 1985到1986,为美国哈佛大学国际发展研究所(HIID)访问学者. 1986年入该校经济系攻读博士, 从师艾里克马斯金,安德烈史莱法,以及亚诺什科尔耐, 主修经济理论,公司金融, 和比较经济学. 1992年获哈佛大学哲学博士(经济学)学位. 1992至1999任美国安娜堡密西根大学经济系助理教授并兼任该校中国研究中心研究员. 1997至1998, 从密西根大学请假,任美国斯坦福大学胡佛研究所国家研究员,从事中国经济改革的制度变迁研究. 1999至2004年长期聘为香港科技大学经济系副教授,并任该校经济发展研究中心副主任.李稻葵曾兼任世界银行中国社会保障体制改革研究项目顾问 (1989), 国际<<比较经济学杂志>> (Journal of Comparative Economics)编委 (2000-03), 中国留美经济学会(CES)会长 (2001-02), 清华大学经济管理学院特聘教授(2002-03). 现兼任(欧洲)经济政策研究中心(CEPR), 美国密西根大学威廉戴维森研究所 (The William Davidson Institute)研究员; 国际《经济学通報》(Economics Bulletin),中国<<经济研究>>,香港《中国评论》(The China Review)等学术杂志的编委; 国际比较经济研究会执行理事; 南开大学,四川大学,西南财经大学兼职教授。
CHAPTER 18EXTERNALITIES AND PUBLIC GOODSTEACHING NOTESThis chapter discusses the remaining types of market failure that were introduced at the end of Chapter 16 and were not covered in Chapter 17. Section 18.1 defines the concept of externalities, both positive and negative. Section 18.2 discusses methods of correcting for the market failure that arises in the presence of externalities. These two sections give a good self-contained overview of externalities and possible remedies. If you have limited time, at least try to cover these sections.Section 18.3 considers stock externalities where the social cost is due to the accumulated stock of a pollutant. Global warming is an example that will garner student interest. If you want to pursue the global warming example (Example 18.5), you might consider assigning Exercise 8, but do so only if students know how to calculate net present values. If you do assign Exercise 8, you probably ought to give students the exact net benefit values for all 101 years. These are provided with the answer for that exercise in the following pages. Without the exact values, you will not be able to solve for the requested discount rate.Section 18.4 deals with property rights and the Coase theorem. Section 18.5 discusses common property resources such as fisheries, and Section 18.6 covers public goods. Section 18.7 offers a brief discussion of determining the optimal level of a public good. Overall the chapter provides a good overview of some very interesting problems. Any instructor who has the time and desire to expand upon the presentation in the chapter can find a wealth of information by consulting an environmental or resource economics textbook. There are an abundance of examples related to pollution and natural resource issues that you could talk about. Check your local newspaper for ideas.The production and consumption of many goods involve the creation of externalities. Stress the divergence between social and private costs, and the difference between the private (competitive) equilibrium and the socially optimal (efficient) equilibrium. Although private competitive markets produce too much pollution, it is critical to make sure students understand that the optimal amount of pollution is not zero. In fact, it is interesting to ask students to define what zero pollution would mean (it’s not entirely clear) and what life would be like without pollution (no cars, trucks, man-made fertilizer, computers, cell phones, etc., etc.).You can use students’ knowledge of consumer and producer surplus to explore the welfare gain of moving from the competitive to the efficient equilibrium. Exercise 9 presents the classic beekeeper/apple-orchard problem, originally popularized in James E. Meade, “External Economies and Diseconomies in a Competitive Situation,” Economic Journal, March 1952, 62:245, 54-67. Empirical research on this example has shown that beekeepers and orchard owners have solved many of their problems: see Steven N.S. Cheung, “The Fable of the Bees: An Economic Investigation,” Journal of Law and Economics, April 1973, 16:1, 11-33.One of the main themes of the law and economics literature since 1969 is the application of Coase’s insight on the assignment of property rights. The original article is clear and can be understood by students. Stress the problems posed by transactions costs. For a lively debate, ask students whether non-smokers should be granted the right to smokeless air in public places (see Exercise 5). For an extended discussion of the Coase Theorem at the undergraduate level, see A. Mitchell Polinsky, Chapters 3-6, An Introduction to Law & Economics, Aspen Publishers, 3rd edition, 2003.The last two sections of the chapter focus on public goods and private choice. Point out the similarities and differences between public goods and other activities with externalities. Since students confuse nonrival and nonexclusive goods, create a table similar to the following and give examples to fill in the cells:Nonexclusive ExclusiveRival Most Goods Congested Local RoadsNonrival Cable TV Programs Public GoodsWhen determining the amount of a public good the government should provide, some students will not understand why we add individual demand curves vertically rather than horizontally. Stress that by summing horizontally we are finding the total quantity supplied/demanded at any given price. By summing vertically we are finding the total willingness to pay for a given quantity. The coverage of public choice is a limited introduction to the subject, but you can easily expand on this material. A logical extension of this chapter is an introduction to cost-benefit analysis. For applications of this analysis, see Part III, “Empirical Analysis of Policies and Programs,” in Robert H. Haveman and Julius Margolis (eds.), Public Expenditure and Policy Analysis, Houghton Mifflin, 3rd edition, 1983.QUESTIONS FOR REVIEW1. Which of the following describes an externality and which does not? Explain the difference.a. A policy of restricted coffee exports in Brazil causes the U.S. price of coffee to rise –an increase which in turn also causes the price of tea to rise.Externalities cause inefficiencies because the price of the good does not reflect the truesocial value of the good. A policy of restricting coffee exports in Brazil causes the U.S.price of coffee to rise because supply is reduced. As the price of coffee rises, consumersswitch to tea, thereby increasing the demand for tea, and hence increasing the price oftea. These are market effects, not externalities.b.An advertising blimp distracts a motorist who then hits a telephone pole.The advertising blimp is producing information. However, its method of supplying thisinformation can be distracting for some consumers, such as those who happen to bedriving. The blimp is creating a negative externality that influences drivers’ safety.Since the price the advertising firm charges its client does not incorporate theexternality of distracting drivers, too much of this type of advertising is produced fromthe point of view of society as a whole.2. Compare and contrast the following three mechanisms for treating pollution externalities when the costs and benefits of abatement are uncertain: (a) an emissions fee, (b) an emissions standard, and (c) a system of transferable emissions permits.The choice between an emissions fee and an emissions standard depends on themarginal cost and marginal benefit of reducing pollution. First, suppose small changesin abatement yield large benefits while adding little to cost. In this case, if anemissions fee is set too low because of uncertainty, the firm will produce far too manyemissions, so a standard is better. However, if small changes in abatement yield littlebenefit while adding greatly to cost, the cost of reducing emissions is high. In this case,fees should be used because setting a standard too high (due to uncertainty) yields littlebenefit but increases costs way beyond the efficient level.A system of transferable emissions permits combines the features of fees and standardsto reduce pollution. Under this system, a standard is set and fees are used to transferpermits to firms that value them the most (i.e., firms with high abatement costs).However, because of uncertainty, the total number of permits can be incorrectly chosen.Too few permits will reduce emissions to inefficiently low levels and create excessdemand for the permits, increasing their price and inefficiently diverting resources toowners of the permits.Typically, pollution control agencies implement one of the three mechanisms, measurethe results, reassess the success of their choice, then reset new levels of fees orstandards or select a new policy tool.3. When do externalities require government intervention? When is such intervention unlikely to be necessary?Economic efficiency can be achieved without government intervention when theexternality affects a small number of people so that bargaining costs are small. As theCoase theorem tells us, the resulting outcome will be efficient in this case regardless ofhow property rights are specified. When these conditions are not met, governmentintervention is often required.4. Consider a market in which a firm has monopoly power. Suppose in addition that the firm produces under the presence of either a positive or a negative externality. Does the externality necessarily lead to a greater misallocation of resources?In the presence of a negative externality, a competitive market produces too muchoutput compared to the socially optimal amount. But a monopolist restricts output,so it is possible that the monopolist will produce an output closer to the sociallyoptimal solution. In the case of a positive externality, competitive firms produce toolittle output. Because a monopolist produces even less output, the monopolist causesa greater misallocation of resources.5. Externalities arise solely because individuals are unaware of the consequences of their actions. Do you agree or disagree? Explain.Disagree. It is not that people are unaware but that they have no economic incentiveto consider and account for all of the consequences of their actions. If a firm dumpswaste into a river that affects a swimming area downstream, it is generating anegative externality for the people downstream. This action maximizes the firm’sprofit if the firm incurs no private costs for dumping and is not forced to consider theexternal costs it is imposing on users of the swimming area. This is true whether thefirm is aware of these social costs or not.6. To encourage an industry to produce at the socially optimal level, the government should impose a unit tax on output equal to the marginal cost of production. True or false? Explain.This statement is false. While a tax can encourage firms to produce at the sociallyoptimal level, the tax should be set equal to the marginal external cost and not themarginal private cost. Competitive firms will maximize profit by producing at thepoint where price is equal to marginal cost. When there are external costs involvedthe marginal private cost of the firm is too low from society’s point of view, and as aresult too much output is produced. By setting a tax equal to the additional cost notbeing realized by the firm (the marginal external cost) the firm will be encouraged toconsider all costs and will reduce output because the tax will increase its overallmarginal cost.7. George and Stan live next door to each other. George likes to plant flowers in his garden, but every time he does, Stan’s dog comes over and digs them up. Stan’s dog is causing the damage, so if economic efficiency is to be achieved, it is necessary that Stan pay to put up a fence around his yard to confine the dog. Do you agree or disagree? Explain.Disagree. Economic efficiency does not require that Stan pay for the fence; it merelyrequires that Stan and George resolve the problem so that social welfare (totalbenefits less total costs) is maximized, regardless of who pays for it. For example,George and Stan could split the cost of a fence, George could pay Stan to get rid of hisdog, or Stan could pay George not to plant flowers.Given typical property rights, it seems likely that George could sue Stan and that acourt would require Stan to pay for a fence or get rid of his dog. And it seems fairthat Stan should have to do this, but it is not required for economic efficiency.8. An emissions fee is paid to the government, whereas an injurer who is sued and held liable pays damages directly to the party harmed by an externality. What differences in the behavior of victims might you expect to arise under these two arrangements?When victims can receive the damages directly, they are more likely to file a claim,initiate a suit, and try to overstate their damages. When victims do not receive thedamages directly, they are less likely to report violations and are less likely tooverstate their damages. In theory, emissions fees paid to the government equal thedamage inflicted on others and hence move firms toward the socially optimal level ofproduction. But since the fees are paid to the government rather than to theindividuals who were injured, the affected individuals are less likely to file a complaintthan they would if they received compensation for the damages directly.9. Why does free access to a common property resource generate an inefficient outcome?Free access to a resource means that the marginal cost to the user is less than themarginal social cost, because each user has no incentive to consider how his use of theresource will affect the use of the resource by others. The use of a common propertyresource by a person or firm reduces others’ use of it. For example, the use of water byone consumer restricts its use by another. Since private marginal cost is below socialmarginal cost, too much of the resource is consumed by the individual user, creating aninefficient outcome. Each individual using the common property resource considersonly his own actions and does not consider how all of the users collectively are affectingthe resource.10. Public goods are both nonrival and nonexclusive. Explain each of these terms and show clearly how they differ from each other.A good is nonrival if, for any level of production, the marginal cost of providing the goodto an additional individual is zero (although the cost to produce an additional unitcould be greater than zero). A good is nonexclusive if it is impossible or very expensiveto exclude individuals from consuming it once it is available to one individual. Publicgoods are nonrival and nonexclusive. Good examples are national defense, a lighthouseand public television. Some goods are nonrival but exclusive such as a bridge duringlow traffic periods. One more person can use the bridge without any additional cost tothe bridge authority and without imposing costs on other drivers in the form ofcongestion, but the bridge authority can exclude users by setting up tollbooths. Somegoods are nonexclusive but rival. For example, a large lake can be nonexclusive becauseanyone can use it, but the more people there are fishing, the fewer fish are available toothers, so it is rival.11. A village is located next to 1000 acres of prime grazing land. The village presently owns the land and allows all residents to graze cows freely. Some members of the village council have suggested that the land is being overgrazed. Is this likely to be true? These same members have also suggested that the village should either require grazers to purchase an annual permit or sell off the land to the grazers. Would either of these be a good idea?It is true that the common land is likely to be overgrazed since each individual willconsider only their own private cost and not the total social cost of grazing. Thesocial cost of grazing is likely to be higher than any one individual’s private costbecause no one individual has an incentive to take into account how his grazingaffects the opportunities of others. As a result, conservation efforts by individualsare pointless.For example, one individual could decide to graze only in certain areas during certaintimes of the year, while preserving other areas for other times of the year. However,the individual will not do this if the resource is common property as any other grazercan come along and freely disrupt the preservation system that the individual hasset up.Selling annual permits may help, but an annual permit will exclude only thosegrazers whose total benefits are less than the price of the permit. Anyone who buysthe permit will still have the same incentive to overgraze the commons. Selling theland outright is a better solution to the overgrazing problem. If an individualpurchases the land she will then have an incentive to consider all of the costsassociated with using the land, and as a result will use it in such a way that theresource is preserved, since she alone captures all of the benefits of preserving theresource. Another possibility would be to charge users based on the amount ofgrazing their cows do. If the grazing fee were set correctly, the efficient amount ofgrazing could be induced. However, it might be difficult to determine the correct fee,and the village would have to keep track of each resident’s grazing and bill him orher accordingly.12. Public television is funded in part by private donations, even though anyone with a television set can watch for free. Can you explain this phenomenon in light of the free rider problem?The free rider problem refers to the difficulty of excluding people from consuming anonexclusive commodity. Non-paying consumers can “free-ride” on commoditiesprovided by paying customers. Public television is funded in part by contributions.Some viewers contribute, but most watch without paying, hoping that someone elsewill pay so they will not have to. To combat this problem these stations ask consumersto assess their true willingness to pay and ask them to contribute up to this amount.They then attempt to make those people feel good about their actions and makeeveryone else feel guilty for free riding.13. Explain why the median voter outcome need not be efficient when majority-rule voting determines the level of public spending.The median voter is the citizen with the middle preference: half the voting populationis more strongly in favor of the issue and half is more strongly opposed. Undermajority-rule voting, where each citizen’s vote is weighted equally, the preferredspending level on public-goods provision of the median voter will win an electionagainst any other alternative. However, majority rule is not necessarily efficient,because it gives each citizen’s preferences equal weight. For an efficient outcome, wewould need a system that measures and aggregates the willingness to pay of thosecitizens consuming the public good. Majority rule is not this system. However, as wehave seen in previous chapters, majority rule is equitable in the sense that all citizensare treated equally. Thus, we again find a trade-off between equity and efficiency.EXERCISES1. A number of firms have located in the western portion of a town after single-family residences took up the eastern portion. Each firm produces the same product and in the process emits noxious fumes that adversely affect the residents of the community.a.Why is there an externality created by the firms?The noxious fumes emitted by the firms impose costs on the town’s residents, and theresidents have no control over the quantity of the fumes. Costs may include reducedvisibility, difficulty breathing, foul-smelling air, increased health problems, andreduced property values. The firms, however, do not have to pay to release the fumes,so the costs borne by the town’s residents are not reflected in the firms’ costs or theprices of their products. Thus, there is a negative externality created by the firms.b.Do you think that private bargaining can resolve the problem? Explain.If residents anticipated the location of the firms when the eastern part of the town wasdeveloped, housing prices would have reflected the disutility of the fumes, and theexternality would have been internalized by the housing market in housing prices. Inthis case there is no problem. If the noxious fumes were not anticipated, privatebargaining could resolve the problem of the externality only if there are a relativelysmall number of parties (both firms and families). Private bargaining would rely oneach family’s willingness to pay for air quality, but truthful revelation might not bepossible. All this will be complicated by the adaptability of the production technologyknown to the firms and the employment relations between the firms and families. It isunlikely that private bargaining will resolve the problem.c. How might the community determine the efficient level of air quality?The community could determine the economically efficient level of air quality byaggregating the families’ willingness to pay and equating it with the marginal cost ofpollution reduction. Both steps involve the acquisition of truthful information, which islikely to be quite difficult.2. A computer programmer lobbies against copyrighting software, arguing that everyone should benefit from innovative programs written for personal computers and that exposure to a wide variety of computer programs will inspire young programmers to create even more innovative programs. Considering the marginal social benefits possibly gained by this proposal, do you agree with this position?Computer software is a classic example of a public good. Since it can be costlesslycopied, the marginal cost of providing software to an additional user is near zero.Therefore, software is nonrival. (The fixed costs of creating software are high, but thevariable costs are low.) Furthermore, it is expensive to exclude consumers fromcopying and using software because copy protection schemes are available only at highcost or high inconvenience to users. Therefore, software is by and large nonexclusive.As both nonrival and substantially nonexclusive, computer software suffers theproblems of public goods provision: the presence of free riders makes it difficult orimpossible for markets to provide the efficient level of software. Rather than regulatingthis market directly, the legal system guarantees property rights to the creators ofsoftware. If copyright protection were not enforced, it is likely that the softwaremarket would collapse, or that there would be a significant decrease in the quantity ofsoftware developed and supplied, which would reduce social benefits. The youngprogrammers would not be inspired to create even more innovative programs becausethere would be no private reward for doing so. Therefore, we do not agree with thecomputer programmer.3. Assume that scientific studies provide you with the following information concerning the benefits and costs of sulfur dioxide emissions:Benefits of abating (reducing) emissions: MB = 500 – 20ACosts of abating emissions: MC = 200 + 5Awhere A is the quantity abated in millions of tons and the benefits and costs are given in dollars per ton.a.What is the socially efficient level of emissions abatement?To find the socially efficient level of emissions abatement, set marginal benefit equal tomarginal cost and solve for A:500 – 20A = 200 + 5AA = 12 million tons.b.What are the marginal benefit and marginal cost of abatement at the sociallyefficient level of abatement?Plug A = 12 into the marginal benefit and marginal cost functions to find the benefitand cost:MB = 500 – 20(12) = 260MC = 200 + 5(12) = 260.c.What happens to net social benefits (benefits minus costs) if you abate one millionmore tons than the efficient level? One million fewer?Net social benefits are the area under the marginal benefit curve minus the area underthe marginal cost curve. At the socially efficient level of abatement this is equal to areaa+b+c+d in the figure below, or0.5(500 – 200)(12) = $1800 million.If you abate one million tons too many, the net social benefit is area a+b+c+d–e, or1800 – 0.5(265 – 240)(1) = 1800 – 12.5 = $1787.5 million.If you abate 1 million too few tons, then the net social benefit is area a+b or0.5(500 – 280)(11) + (280 – 255)(11) + 0.5(255 – 200)(11) = $1787.5 million.Ad.Why is it socially efficient to set marginal benefits equal to marginal costs ratherthan abating until total benefits equal total costs?It is socially efficient to set marginal benefit equal to marginal cost rather than totalbenefit equal to total cost because we want to maximize net benefits, which are totalbenefit minus total cost. Maximizing total benefit minus total cost means that at themargin, the last unit abated will have an equal cost and benefit. Choosing the pointwhere total benefit is equal to total cost would mean that net benefits equal zero, andwould result in too much abatement. This would be analogous to choosing to producewhere total revenue was equal to total cost. If total revenue was always equal to totalcost by choice, then there would never be any profit. In the case of abatement, themore we abate, the costlier it is. Given that funds will tend to be scarce, dollars shouldbe allocated to abatement only so long as the benefit of the last unit of abatement isgreater than or equal to the cost of the last unit of abatement.4.Four firms located at different points on a river dump various quantities ofeffluent into it. The effluent adversely affects the quality of swimming forhomeowners who live downstream. These people can build swimming poolsto avoid swimming in the river, and the firms can purchase filters thateliminate harmful chemicals dumped in the river. As a policy advisor for aregional planning organization, how would you compare and contrast thefollowing options for dealing with the harmful effect of the effluent:a.An equal-rate effluent fee on firms located on the river.First, one needs to know the value to homeowners of swimming in the river. Thisinformation can be difficult to obtain, because homeowners will have an incentive tooverstate this value. As an upper bound, if there are no considerations other thanswimming, one could use the cost of building swimming pools, either a pool for eachhomeowner or a public pool for all homeowners. Next, one needs to know the marginalcost of abatement. If the abatement technology is well understood, this informationshould be readily obtainable. If the abatement technology is not understood, anestimate based on the firms’ knowledge must be used.The choice of a policy tool will depend on the marginal benefits and costs of abatement.If firms are charged an equal-rate effluent fee, the firms will reduce effluent to thepoint where the marginal cost of abatement is equal to the fee. If this reduction is nothigh enough to permit swimming, the fee could be increased. Alternatively, revenuefrom the fees could be used to provide swimming facilities, reducing the need foreffluent reduction. If the fee is set equal to the marginal social cost of the pollution, theefficient level of dumping will result.b.An equal standard per firm on the level of effluent that each can dump.An equal standard will be efficient only if all the firms have the same marginalabatement costs and the policy maker has complete information regarding themarginal costs and benefits of abatement, so that the efficient level of the standard canbe determined. If the marginal costs of abatement differ across firms, an equalstandard will result in some firms reducing their effluent by too much and others by toolittle. Moreover, the standard will not encourage firms to reduce effluent further if newfiltering technologies become available.c. A transferable effluent permit system in which the aggregate level of effluent isfixed and all firms receive identical permits.A transferable effluent permit system requires the policy maker to determine theefficient total effluent level. Once the permits are distributed and a market develops,firms with higher abatement costs will purchase permits from firms with lowerabatement costs. In this way, the effluent level determined by the policy maker will beachieved efficiently. However, unless permits are sold initially rather than given away,no revenue will be generated for the regional organization.5. Medical research has shown the negative health effects of “secondhand” smoke. Recent social trends point to growing intolerance of smoking in public areas. If you are a smoker and you wish to continue smoking despite tougher anti-smoking laws, describe the effect of the following legislative proposals on your behavior. As a result of these programs, do you, the individual smoker, benefit? Does society benefit as a whole?Since smoking in public areas is similar to polluting the air, the programs proposedhere are similar to those examined for air pollution. A bill to lower tar and nicotinelevels is similar to an emissions standard, and a tax on cigarettes is similar to anemissions fee. Requiring a smoking permit is similar to a system of emissions permits,assuming that the permits would not be transferable. The individual smoker in all ofthese programs is being forced to internalize the externality of “second-hand” smokeand will be worse off. Society will be better off if the benefits of a particular proposaloutweigh the cost of implementing that proposal. Unfortunately, the benefits ofreducing second-hand smoke are uncertain, and assessing those benefits is costly.。
