Question

Short essays (maybe a page each)
1. Explain why an economy with one competitive industry and one monopoly causes economic inefficiency. (This answer should include a definition of economic efficiency.)

2. Based on economic efficiency, would it be a good idea to levy a tax on a good produced by a monopoly? Explain.

3. You own the note shown here:

Payable to Bearer:
$100 on May 14, 20XX
Signed: ___________

Whoever owns this note a year from today will be given $100 at that time. If you own this note today but want money today, how would you determine a fair price at which to sell it? Explain.

4. Long Essay – at least 2 pages -- on the following.  
Essentially every economist believes that the best approach to CO2 abatement is the carbon tax. Write an essay explaining why economists believe this is true. You should write this as if it is to be read by a roommate who has taken no economics. Among other things your answer should address the following question: One consequence of a carbon tax would be to increase the price of electricity. Is this part of the beneficial effect of the carbon tax or is it an unfortunate side effect?

Answer 1

Answer:-

economic efficiency :-

It is the point at which all merchandise and factors of creation in an economy are appropriated or designated to their most significant uses and waste is disposed of or limited.

(1)Here we need to Explain why an economy with one competitive industry and one monopoly causes economic inefficiency.

the firm will set a particular cost for a decent that is accessible to all buyers. ... The imposing business model valuing makes a deadweight misfortune in light of the fact that the firm does without exchanges with the customers. The deadweight misfortune is the potential picks up that didn't go to the maker or the customer.

2. Here we need to explain Based on economic efficiency, would it be a good idea to levy a tax on a good produced by a monopoly

Nope,it would not be a good idea to levy a tax on a good produced by a monopoly

So the issue with hoarded businesses is that they produce nearly nothing, and with their lower creation levels, they eventually have less need to recruit work and capital. Burdening imposing business models just exacerbates their low utilization of work and capital. ... The outcome is an opposition for the capacity to have a restraining infrastructure

(3)Here we need to explain  how would you determine a fair price at which to sell it

Given that,

Payable to Bearer:
$100 on May 14, 20XX

To know the value of fair price

we have formula as

A year from today will be given $100 at that time.

If you own this note today but want money today

Then

= 95.238

therefore, Fair price = 95.238

(4) Is this part of the beneficial effect of the carbon tax or is it an unfortunate side effect

A carbon charge is a toll applied to non-renewable energy sources dependent on how much carbon dioxide they discharge when copied. Coal, for instance, discharges more carbon contamination than petroleum gas to deliver a similar measure of vitality. The government carbon assessment will raise the cost of coal more than the cost of flammable gas

Research shows that carbon burdens viably decrease ozone harming substance emanations. There is overpowering understanding among market analysts that carbon charges are the most proficient and powerful approach to check environmental change, with the least unfriendly consequences for the economy.

Nope, carbon tax will not increase the price of electricity.

Thank you