Q7
Elastic demand is a of demand that result from either fall or rise in price of a commodity. The group of consumers whoa are elastic would stop consuming a lot of gas when the price of the commodity is increased. When tax is imposed on the commodity, they would also reduce their consumption as anticipated. The inelastic group of consumer would however not cut down their consumption of the gas. This is because they are inelastic and the rising of price of gas through imposing of tax would not have any impact n this group of consumers. The inelastic group would support the regulator policy since they are elastic demand consumers and always respond to the changes in the market. The group whose consumption is elastic would support the tax policy. This is because the group is sensitive to price changes due to imposition of tax.
Q8
Assuming there will be restrictions and there is perfect competition in the market, the demand for fish will rise hence shifting the demand curve right. This means the quality of fish demanded will increase and the price at which is sold will reduce. The socially efficient price and quantity will be at the point at which the MSC curve intersects the new demand curve. This value is higher than the initial point of intersection of the two curves. When a ban is proposed, the quality of fish reduce the high demand as result little or no fish produced. The price will also increase due the high demand resulting from low quantity of fish produced. This is illustrated in the graph above.
Q9
Recycling increases due to increase in efficiency resulting from less garbage being handled at the recycling site. Less garbage means faster recycling process hence more garbage recycled. Garbage collection decreases due imposition of fee. This means less people want to pay the collection charges hence look for alternative ways of disposing the garbage. The volume of garbage collection was higher than the weight of garbage collected since most people will not dispose garbage that would be recycled in the house like paper bags hence will choose to dispose only those which cannot be recycled in the house most of which are wet garbage like food stuff.
The quality of garbage reduce due to increase in price while the quality of garbage collected will increase due to price decrease as shown the above graph
Q12
This is public like city park lake completion. It is a public good and hence the completion for the good is low since nobody owns the good and the care for the good is bestowed upon everyone benefiting from the good. Everyone derive the benefit of the product/good hence the public will derive maximum benefits from the good hence its efficiency is rated high. Its also difficult to exclude someone from who does not pay for the good.
Q16
Adverse selection problems are problems arising from hidden information. This is commonly in a market where on one side of the market some people have information while on the other side people have no information,. Examples of such market are the education market and the second hand car market. The most in most cases in that people are tempted to lie before the contract is signed about the type of contract to enter.
REFERENCE
Anderson, L. (2008) Comparative Analysis of Labor and Work. Cambridge, Mass: Harvard University Press.
Richards, A. (2001) Labor Economics, Prepared for RAND project. Cambridge, Mass: Harvard University Press
