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A. In a monopoly market where production generates a positive externality social welfare is always increased by replacing the monopoly with perfectly competitive firms.
True
False
B. People who keep their yard neat and attractive provide a positive externality for others in the neighborhood. Assume that Jeffrey obtains utility of 4 from the attractiveness of his yard for each hour per week he spends tending it. On the other hand, his disutility from tending his yard is H2, where H is hours spent per week. Which of the following statements are true?
a. 4 hours of yardwork are privately optimal for Jeffrey
b. 2 hours of yardwork are privately optimal for Jeffrey
c. 4 hours of yardwork are socially optimal
d. 8 hours of yardwork are socially optimal
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Could someone please explain this I think it means that because of the large crop, farmers' incomes will fall because of the increase supply per farmer. Prices would then have to be competitively low to sell due to the high supply and as such the ..
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