Externality Case Study Essay

What is the equilibrium wage? _$60,000_________________________ Now, consider this scenario Due to an augment in the internet security threats, the government wants to apply a equipment casualty control in this commercialise to encourage more mass to fetch internet security professionals. Assume that a wage control is site at $75,000. Will this sum up the number of people entering this dig market? Why or why non? Will this attach the number of people hired?Why or why non? It impulsive maturation the number of people entering this labor market beca habit of the increase of pay from the equilibrium will be enticing, but this will cause a paucity in the labor market. Because the number of people entering this labor market has increased, there will not be enough office staffs for them. Due to this, the number of people hired will decrease. Also, separate factor to take into account is the budget for the companies for these smears. If the equilibrium is set at $60,000 t he company might not be in a position to increase the pay rate to accommodate the footing control, thus ca utilise them not to be adapted to fill those positions.2. Assume you are a policymaker in Washington DC. Lobbyists for the preschoolers of America have put pressure on their representatives to cap prices on graham flour crackers. You have been assigned a position on a new committee to study the impact of a price ceiling on graham crackers.Your job is toa.) Illustrate use a fully designate supply and demand graph (label every the axes and any lines you put in your graph) what such an artificial price looks like. b.) formulate what the results of such a move are for the graham cracker market. In opposite words, will there be a SHORTAGE, a SURPLUS, or neither created? Why?b.) There will be a shortage created. Initially the public might be happy about the price ceiling, but soon after the sellers will begin to ration the graham crackers based on other factors since the on e most willing to pay will no longer be a factor. Also, this might cause consumers to stand in long lines in order to be able to purchase the graham crackers, but since there are not enough graham crackers supplied, not everyone will be able to purchase the graham crackers. In the end, pull inrs will move on to produce other products that are more profitable than graham crackers, worsening the shortage.3. taint is considered by most a negative outwardness. Some economistswould like to put one across the costs of these burdens incorporated into the price of goods that we buy. For instance, since coal fire power plants increase emissions that could potentially pass to climate change, these economists believe that the price we pay for electrical energy is not adequately high enough. Draw a completely labeled graph and illustrate on the graph how much higher electrical energy prices would be if the full costs of electricity production were taken into account. You do not need to prov ide actual numbers rather, show on the price axis where the price would be before the externality is considered and the price after the externality is included. What problems might exist in determining this new, externality based, price?People might not be able to relent the new prices if the external costs are included which may lead to the consumers to look for alternatives in power source. Some of these alternatives may include using more archaic versions such as firewood or coal, which may increase pollution. Or they might be lead to steal electricity or use the black market for alternative power source.4. In the hoar days lighthouses were built along the coast to prevent ships from blendning aground on rocks in unfamiliar airs. By shining a air of light over a port and guiding ships away from rocks, these vital buildings reduced the risk for ship captains and were generally considered to be extremely of import resources. Curiously, lighthouses were almost always run and maintained by local governments. develop in economic terms why private firms would not run a lighthouse. A private firm would not run a lighthouse because it is considered a public good. The lighthouse is non-excludable since the private company cannot block up anyone from using the lighthouse.It is also non-rivalrous since the quality does not go down if other ships or companies use the lighthouse. If a private firm built a lighthouse, eventually other businesses will use the lighthouse to travel to the port causing the private firm to be upset about the other firms taking advantage of its use. Since the private firm would not be provoke in building lighthouses because it is non-excludable and non-rivalrous, it would be in the governments best interest to use its resources (taxes and such) to build the lighthouse. This in turn will help improve the preservation since thecompanies can now bring their supplies without fear of losing their ships in the night.