Show graphically how big the tax should be per novel

Reference no: EM131824613

Question: Cultural influences often create externalities, for good and ill. A happy movie might make people smile more, which improves the lives of people who don't see the movie. A fashion trend for tight-fitting clothing might hurt the body image of people who think they won't look good in the trendy clothing. Let's consider the market for one cultural good that unrealistically raises expectations about the opposite sex: the romance novel. In romance novels, men are dangerous yet safe, they are wealthy yet never at work, they ride high-speed motorcycles yet never get in terrible accidents, they look fantastic even though they never waste endless hours at the gym, and so on. (Of course, advertising that focuses on sexy female models may also unrealistically raise expectations about the opposite sex so feel free to change our example as you see best.)

a. Consider the following market. Romance novels impose an external cost on men, who have to try to live up to these unrealistic expectations. Illustrate the effect of this external cost in the figure.

b. Illustrate in the figure the deadweight loss from the externality, before a tax or other solution is imposed.

c. If the government decides to compensate for the externality by imposing a tax on romance novels, should the tax be high enough to stop everyone from reading the novels? Why or why not?

d. Show graphically how big the tax should be per novel.

e. As long as the government spends the money efficiently, does it matter what the government spends the money from the "romance novel tax" on? In other words, could the government just use the money to pay for necessary roads and bridges, or does it need to spend the money to fix the harmful social effects of romance novels?

Reference no: EM131824613

Questions Cloud

What would be the incremental benefit : Stand A requires 6 labor hours and stand B requires 3 labor hours. What would be the incremental benefit of obtaining 15 additional labor hours

Provide a list of offenses that you would like to see : Siegel states that "criminologists study both the process by which deviant acts are criminalized and become crimes and, conversely.

Joint distribution as in the preceding problem : Does this give the same joint distribution as in the preceding problem or a different one?

Who is more likely to score above 150 : Claudia's scores in this game are (approximately) normally distributed with a mean of 110 and a standard deviation of 15. a) Who is more likely to score above

Show graphically how big the tax should be per novel : Cultural influences often create externalities, for good and ill. A happy movie might make people smile more, which improves the lives of people who don't see.

Why is the report writing component important in both : Why is the report writing component important in both? Summarize the necessary components of each.

Analyze the potential costs and benefits of each option : Identify the sources of long-term financing for Genesis Energy. Analyze the potential costs and benefits of each option.

What is the rate parameter of the distribution : Suppose X and Y are independent random variables with X ~ Pois(?1) and Y ~ Pois(?2). Is X + Y a Poisson random variable?

How concerned are you at becoming a victim of identity theft : Describe the positive and negative aspects of this and the influence on crime. Does the connected world influence local crime as well?

User Account

All Pages