Public Finance
In Montana, there are some large deposits of water containing dissolved methane (fossil fuel).
It is possible to pump this water out of the ground and release the methane, which can then be sold. This process produces lots of waste water, which poisonous properties, which is being dumped into nearby streams, which then flow onto the land of downstream ranches, severely damaging the land. Discuss this problem using the tools of public finance and propose two solutions, one involving taxes and the other involving property rights. In Montana, there are some large deposits of water containing dissolved methane (fossil fuel).
It is possible to pump this water out of the ground and release the methane, which can then be sold. This process produces lots of waste water, which poisonous properties, which is being dumped into nearby streams, which then flow onto the land of downstream ranches, severely damaging the land. Discuss this problem using the tools of public finance and propose two solutions, one involving taxes and the other involving property rights.
Question 2
In the Sinazongwe area of Southern Province cattle Ranching and crop agriculture are the main economic activities. Cattle kept by the ranchers have been found to destroy the crop thus causing losses in terms of reduced food output. The table below shows, for each of cow/bull output, the Marginal cost (MC), the marginal benefit (MB) to rancher, and the Marginal damage (MD) done to crops:
Output
MC
MB
MD
1
400
1600
400
2
800
1600
800
3
1200
1600
900
4
1600
1600
1000
5
3200
1600
1200
6
6400
1600
1400
What will be the herd size in Sinazongwe?
What is the socially efficient size of the herd?
Suppose the Zambia Agriculture Research Institute has developed a cattle control technology which reduces the damage to crops by two thirds. The new technology increases marginal cost of each cow/bull by 100 units. What is the efficient size of the herd?
It is possible to pump this water out of the ground and release the methane, which can then be sold. This process produces lots of waste water, which poisonous properties, which is being dumped into nearby streams, which then flow onto the land of downstream ranches, severely damaging the land. Discuss this problem using the tools of public finance and propose two solutions, one involving taxes and the other involving property rights. In Montana, there are some large deposits of water containing dissolved methane (fossil fuel).
It is possible to pump this water out of the ground and release the methane, which can then be sold. This process produces lots of waste water, which poisonous properties, which is being dumped into nearby streams, which then flow onto the land of downstream ranches, severely damaging the land. Discuss this problem using the tools of public finance and propose two solutions, one involving taxes and the other involving property rights.
Question 2
In the Sinazongwe area of Southern Province cattle Ranching and crop agriculture are the main economic activities. Cattle kept by the ranchers have been found to destroy the crop thus causing losses in terms of reduced food output. The table below shows, for each of cow/bull output, the Marginal cost (MC), the marginal benefit (MB) to rancher, and the Marginal damage (MD) done to crops:
Output
MC
MB
MD
1
400
1600
400
2
800
1600
800
3
1200
1600
900
4
1600
1600
1000
5
3200
1600
1200
6
6400
1600
1400
What will be the herd size in Sinazongwe?
What is the socially efficient size of the herd?
Suppose the Zambia Agriculture Research Institute has developed a cattle control technology which reduces the damage to crops by two thirds. The new technology increases marginal cost of each cow/bull by 100 units. What is the efficient size of the herd?