Spring 2008                 Dr. Olmsted     

Introduction to Microeconomics
Homework # 7
Due: May 1, 2008

1. Examine the list I handed out in class titled: "What do Economists think?"
a. Briefly discuss why most economists feel that regulation actually improves efficiency in #23.
b. What other proposition addresses environmental issues? Are economists generally in agreement concerning how to treat the environment, compared to other issues?
c. What questions on this list deal with the question of asymmetric information?
d. How about concerns about equity?

2. a. Show graphically and explain the impact of removing a cigarette tax.
b. Discuss whether removing this tax will increase or decrease economic efficiency.
c. Who pays most cigarette taxes? What equity issues arise as a result? (There are two!)

3. a. Based on the information in the following article, identify the various negative externalities associated with cars and SUVs.
http://post.economics.harvard.edu/faculty/mankiw/files/may99.html
b. According to the following information, how does NJ compare to other states in terms of the taxes they levy on cars?
http://www.njpp.org/rpt_gastax.html
c. What do the two articles have to say about equity issues related to a gas tax?

4. Visit the following web page http://unstats.un.org/unsd/environment/qindicators.htm
a. Identify the categories of accounts the UN has defined in their attempt to monitor the environment.
b. What makes up these various components?
c. Drawing on the information in this web page, as well as various readings, explain why some economists and other social scientists might be interested in the idea of environmental accounting.

5. Visit http://www.bls.gov/tus/ to obtain answers to the following questions:  
a. What countries currently have time use surveys?
b. Which agency is now collecting US time use data?
c .Drawing on the information in this web page, as well as on the following readings, explain why some economists and other social scientists might be interested in data on time use.
http://unpac.ca/economy/unpaidwork.html
http://hdr.undp.org/reports/global/1999/en/pdf/hdr_1999_ch3.pdf
d. The UN article argues that children are in some sense a public good. Explain this comment, providing a discussion of when children are and are not public goods, as well as discussing the implications for policy makers and society. Be sure to discuss using the terms non-rival and non-excludable. Also discuss why the issue of time use is relevant in thinking about children as public goods.